If you’re preparing to buy a home, clean up your credit report, or if you’re dealing with debt collectors, you may run into some information regarding the Debt Validation Letter. This information generally entails sending a debt validation request on your “valid” debts prior to communicating with the debt collector who is attempting to collect from you.

It is very important that you understand the potential reactions that are created when sending a debt validation letter on “valid” debts.

If you feel your debt isn’t valid, and this information doesn’t apply to you, then you should send a Debt Validation Letter. However, you may want to read this article so you may educate yourself for the future.

I recently spent a little over 7 hours watching the videos produced by the FTC covering their recent debt collection workshop that took place on June 6th, 2013. The workshop participants included representatives of the FTC, CFPB, state regulators, consumer protection attorneys, junk debt buyers, and original creditors.

There was a lot of information that was shared in these videos. Information that can benefit our society when it comes to understanding the debt collection process and how it relates to us.

I have included some of the highlights (short clips) of these videos that pertain to debt validation in this article. I hope you find them to be informative and relevant.

I also share my opinions, when it comes to interpreting this information, from both a debt settlement and debt collection perspective. In an effort to help you better understand the risks of requesting validation on a valid debt.

Debt Validation Letter – What happens when I send one?

The common practice when an account is disputed is to validate it. There could be a 90/10, a 50/50, or a 20/80 chance that they will do so. The probability of validation is generally dependent on your perceived ability to pay, the creditor, and the age of the debt.

In the above clip, Heather Allen, an Attorney who works for the FTC, in the Division of Financial Practices, explains that per the FTC’s report, debt buyers verify disputes about 50% of the time.

The report states: “The information submitted in the study further provides insight into debt buyers’ verification of debts that consumers have disputed. As shown in Table 14, the Commission’s analysis of 713,308 disputed debts in 1,853 portfolios revealed that debt buyers reported that they verified 51.3% of the debts that consumers had disputed. In addition, debt buyers reported that they were more likely to verify debts that they had obtained from the original creditor (55.7%) than debts they had acquired from other debt buyers (35.9%). Regression analysis, presented in Table 15, indicates that debt buyers were significantly less likely to report verification of disputed medical, telecommunications, and utility debt, as compared to verification of credit card debt. Debt buyers also were significantly less likely to verify debt that was more than six years old, as compared to debt less than three years old.”

Based on my experience, the lack of response is generally related to one of two things.

One, if they feel that you are uncollectable, they may not find it personally beneficial to bother with validating the account.

The characteristics that define the most “collectable” accounts to a junk debt buyer or collection agency are accounts where they have confirmed any of the following: your place of employment, open checking or savings account, home ownership, paid or settled charge-offs on credit reports, and high credit and collection scores.

And two, it is possible that they may not be able to validate it.

As Heather Allen pointed out in the video, the older your debt is, and the more it has changed hands, the less likely that they will do so.

If you are debating requesting validation on a credit card debt, make sure to note that the FTC report did state: “debt buyers were significantly less likely to report verification of disputed medical, telecommunications, and utility debt, as compared to verification of credit card debt.”

There is no time limit to provide the validation.

The time for acquisition generally varies as well. Based on my experience, its range can be from anywhere from a few days to possibly as long as 6 months, and sometimes longer.

Which leads me to another consideration you should make: there is no time limit on how long a collection agency or junk debt buyer has to provide you with debt validation. The collection agency or junk debt buyer can respond to a validation request years later. So if you’re thinking that if you dispute the account and they fail to validate it within 30 days, that, that will be the end of it, you’re mistaken.

While it is true that they can’t attempt to collect from you previous to providing the validation after the validation has been requested within the first 30 days, including credit reporting, they can resume their collection efforts after they do so. So if sending a debt validation letter is part of your strategy to clean up your credit report, please know that it is possible that your credit report could be negatively impacted in the future if the account remains unresolved and is validated in the future, provided it’s still within the 7-year reporting period.

Why you should think twice before disputing a valid debt…

I run into it all the time and you may too. Almost every website out there recommends sending a debt validation letter on a valid debt. I believe these people are trying to help you. But, I also believe that they may not be aware of the potential reactions that may be created when sending a debt validation letter on a valid debt. Unless they come from the debt collection industry, they would have no way of knowing how debt collectors think and react to these letters.

Generally, the advice on sending a debt validation letter on a valid debt is premised on making sure that the collection entity who is attempting to collect from you is legitimate. There are ways to accomplish this without exposing yourself to the risks that are associated with formally requesting validation on a valid debt. I explain them in detail at the end of this article.

Now, on to why you should think twice before requesting validation on a “valid” debt.

First, it singles you out…

Most collection agencies and junk debt buyers service tens of thousands to hundreds of thousands of accounts at any given time.

In the above clip, Heather Allen explains that consumers dispute 3.2% of accounts that are being collected by junk debt buyers.

Sending a Debt Validation Letter draws attention to your account.

This next piece of information is going to shock you. Most people assume that junk debt buyers and collection agencies collect a high percentage of the accounts that they service.

Based on my experience when I was in the collection industry, and by information recently reported by the CFPB and the FTC, approximately 80% of all accounts that go into collections are never paid. You read that right, 4 out of 5 accounts go unresolved.

The reality is that junk debt buyers and collection agencies collect a very low percentage of the accounts that they service. In fact, just to put the 80% figure into perspective: it takes a full 7 years to collect the 20%. Which means, on a monthly basis, debt collectors only collect between less than one percent to a few percent of the debt that they are servicing. Most of the 20% that is collected is collected within the first 12 months of the 7-year cycle.

When you consider these dynamics, I personally believe your best protection is to mingle with the tens of thousands to hundreds of thousands of accounts that the collection agency or junk debt buyer is servicing, and to maintain a defensive rather than offensive position.

As you continue to read this article, you will learn that your chances of ever needing to “fight” are quite slim if you don’t put yourself in an adversarial situation to begin with.

Phone calls and letters are standard operating procedure. They’re annoying, they cause stress, but… they’re a lot better than a lawsuit. The good news is that it’s 2014, thanks to technology, there are ways to manage the calls to reduce the stress and annoyance that you’re experiencing, while maintaining the protection that mingling with the 96.8% of people who don’t send a debt validation letter affords you.

My point is that when you are dealing with debt collectors, letters and phone calls are not what you need to “formally” protect yourself from. It’s lawsuits that you want to be ultimately concerned about. So if you’re in a situation to where you are trying to buy time to round up the money to resolve the debt, the last thing you want to do is aid them in filtering through your account in a more expedited fashion than they would have normally.

In the above clip, Brandon Black, former CEO of Encore Capital aka Midland Credit Management (one of the largest debt buyers in the country), explains that 8 out of 10 charge-offs that go into collections never pay.

On the bottom of page 42 it states: “a recent survey found liquidation rates ranging from 12.0 to 28.8 percent depending on the type of debt being collected. ACA International, 2012 Agency Benchmarking Survey, at 21%.”

On the bottom of page 43 it states: “The five publicly traded debt buyers’ portfolios appear to yield, on average, 17% of their purchase price five years after purchase.”

Psychologically, debt validation letters on valid debts put you at a disadvantage.

Here’s something else you may find shocking: based off of my experience, approximately 40% of collection accounts are verbally communicated with. Meaning that approximately 6 out of 10 consumers who are in collections never answer their phone.

Since approximately 80% of collection accounts never pay, and approximately 60% of the accounts are never verbally communicated with, collectors pay very close attention to accounts that demonstrate consumer concern.

In a lot of circumstances requests for validation are intertwined with major purchases. The consumer requesting the validation may be trying to buy a home or clean up their credit report. Sending a debt validation letter demonstrates that the sender desires to have the item resolved on their credit report. If your goal is to settle the debt – this is the worst possible negotiation position to put yourself in.

If collectors think you’re part of the 20%, and not the 80%, they take an entirely different approach.

If they feel that you’re part of the 80%, they lack confidence in your intent. They roll over and negotiate WAY more easily. Almost to the point of desperation in a lot of situations.

If they feel you are part of the 20%, they possess great confidence and they’ll generally be a lot less negotiable. They think they stand in the way of something you want. They feel they have leverage.

I’ve been settling debts for consumers for over 12 years now. In fact, I’m the only debt settlement provider in the country that limits my services to consumers who have the ability to settle ALL of their delinquent debts at the same time. I do this by reviewing my client’s ability to settle their debts via their assets rather than their future income.

In fact, the FTC has reported that less than 10% of consumers who hire a traditional debt settlement company settle all of their debts. You read that right: less than 10%! You can reference this number in the first paragraph on the second page in the link.

In 12 years time, I have never, not once, recommended to my clients to send a debt validation letter on a valid debt. My job is to help my clients avoid adversarial situations that may make their situation worse or more expensive to resolve. Sending debt validation letters on valid debts presents that risk. And they also eliminate the psychological advantage that you had previous to formally making your intentions and desires known.

Sending a debt validation letter on a valid debt also potentially arms the debt collector with the means to escalate their collection efforts against you.

When debt buyers or collection agencies are assigned debt, it is generally done by way of an Excel spreadsheet. There is no contract. There are no statements. So they generally don’t have the means to validate your debt on hand.

The information generally provided to the collection agency or debt buyer is as follows -

Personal Information

Name

Address

Home phone

Work phone – sometimes

Cell phone

Social Security number

Date of birth

Account Information

Creditor

Balance

Account number

Date of last payment – sometimes with the amount

Interest rate

So it’s enough information to communicate and collect from you if you don’t have a dispute. But it’s not what they need in order to legally pursue you. This system has been in place essentially forever.

Most agreements involving the sale of debt to a junk debt buyer permit the JDB to request documents on 10% of the accounts without additional expense.

UPDATE:

On 8-4-2014, the Office of the Comptroller of the Currency (the main regulator over banks) released new guidelines that require banks to provide, at the time of sale, the following when selling their delinquent debts to junk debt buyers. The guidelines are as follows:

A copy of the signed contract or other documents that provide evidence of the relevant consumer’s liability for the debt in question.

Copies of all, or the last 12 (whichever is fewer), account statements.

All account numbers used by the bank (and, if appropriate, its predecessors) to identify the debt at issue.

An itemized account of all amounts claimed to be owed in connection with the debt to be sold, including loan principal, interest, and all fees.

The name of the issuing bank and, if appropriate, the store or brand name.

The date, source, and amount of the debtor’s last payment and the dates of default and amount owed.

Information about all unresolved disputes and fraud claims made by the debtor. Information about collection efforts (both internal and third-party efforts, such as by law firms) made through the date of sale.

In my opinion, this development creates even more reason to not send a debt validation letter on a valid-bank-related debt that has been sold after this guidance was released. As it appears that the junk debt buyers will be able to produce the documentation.

Now back to the original article…

In the above clip, Thomas Lowery, Assistant Attorney General in Maryland, explains that a lot of debt-buyer agreements (previous to 8-4-2014) allow for a small percentage of the documents to be obtained without additional expense.

Brandon Black, explains that his former company only sues 6-8% of the accounts that they purchase.

The JDB is very careful about what they request.

Outside of validating a disputed debt, junk debt buyers generally focus on acquiring the documentation for the most “collectable” accounts, for the purpose of pursuing litigation.

This isn’t the case for all debts…

This is mainly true for debts with large banks.

Apartment leases, commercial, credit union, and bad check debt often differ from this normal protocol on a fairly consistent basis. It is fairly common for the “Media” (industry term for contract, credit app, statements, or affidavit) to either be included or readily available for these classes of accounts.

Interestingly, there appears to be a correlation with the percentage of accounts that are sued and the percentage of accounts that junk debt buyers acquired the Media for.

In the clip above, Brandon Black said that his former company sues approximately 6-8% of the accounts that they purchase. That range is consistent with my experience when I worked for Collect America, now SquareTwo Financial, aka CACV or CACH (another large debt purchaser).

When you compare this information to the documentation that was recently released by the FTC: pertaining to their findings from their investigation of the Debt Buying industry (see the chart below), you will notice that debt buyers obtain Media for 6-8% of the accounts that they purchase.

When you consider junk debt buyers need these documents to successfully obtain a judgment against you (if you fight it), it is risky to ask them to get them, previous to being sued, when you truly owe the account.

Especially when you consider that a fair amount of junk debt buyers file for litigation when they don’t possess the documents, in hope that you will ignore the suit so they will obtain a default judgment. Watch the clip below to see some discussion on that.

It is reported by various outlets that approximately 90% of all judgments related to debt collection are won by default.

In the above clip, Thomas Lowery, Peter Holland: a Consumer Protection Attorney with the University of Maryland, and Brandon Black discuss default judgments and the quality of of the documentation that is commonly produced.

In my opinion, requesting validation on a valid debt not only increases the risk for a lawsuit but it also potentially prepares them for it too.

My logic, which is based on a combined 20 years of experience on both sides of the fence (debt collection and debt settlement), is why increase your risk of suit by requesting validation on a valid debt when you have a 6-8% chance of being legally pursued if you don’t invite them to get the documents?

And furthermore, why prepare them for the suit, by asking them to get the documents they need to prove their case in advance of them taking any legal action?

You effectively reduce your chances of successfully defending the lawsuit when you do so. If you haven’t watched the above clip, please do. It will help you better understand this point.

Clearly, the most opportune time to fight is in the event that you are sued. And if that happens, call an attorney and ask them for help with filing an answer.

Filing an answer will prevent debt buyers and collection attorneys from winning by default. It will also put them in a position to where they will have to prove their case against you.

If you are looking for resolution, your more safe and reliable alternative…

Dealing with debt collectors is like a game of chess. It is vital that you debate their potential reactions to your actions.

When you dispute a “valid” debt, you are risking arming your debt collectors with the information they need to get nasty, you are formally identifying yourself as someone who desires resolution (a major no-no when you’re attempting to negotiate), and you are putting yourself in an adversarial situation with the debt collector who is attempting to collect from you. Thus inhibiting the potential cooperation that you may receive when it comes to working out a settlement or payment arrangement.

Unfortunately, most of the credit and debt advice that you encounter on the Internet encourages you to avoid your debt collectors and to take an offensive/adversarial approach. This is just plain bad advice.

Your best possible deal will be available via conversation with a debt collector. And working out a deal with a debt collector is incredibly similar to working out a deal with a used car salesperson.

When you negotiate verbally, you put yourself in a position to immediately shoot down any offers that are made by the debt collector, which, in turn, influences the debt collector to offer something better.

If you can emotionally place yourself back in that moment when you previously dealt with a used car salesperson, you will probably recall how they wanted to “close” your deal right then and there. That’s exactly how debt collectors operate.

And as you may have experienced in the past with your used car salesperson, one of the debt collector’s tactics to “close” you, is to arrive to an offer that you can’t deny.

Most debt collectors have real-time access to decision makers that enable them to negotiate better deals immediately. Debt collectors work in a very fast-paced environment. It is to your benefit to take advantage of their environment and processes.﻿

If you are interested in resolving the delinquencies on your credit report, it is very wise to resolve your “valid” accounts by engaging your debt collector verbally to work out an affordable arrangement and to get everything in writing prior to making payment.

If you would like help with doing so, please feel free to contact me. I’m a small one-man company, so you will be working directly with me. I charge no upfront fees and my fee is based on a small percentage of the money that I save you.

What if I just want to make sure the collection agency or debt buyer is legitimate?

Your goal is to confirm their involvement without formally drawing attention to yourself.

If you suspect that it COULD be a debt you owe, but don’t recognize the name or you’re uneasy about the third-party collection agency and you would like to confirm their involvement, it is in your best interest to inquire on the chain of title.

This can be done verbally by calling the original creditor and confirming the collection agency or debt buyers’ involvement.

If you’re unclear on who the original creditor is, ask the debt collector for their clients’ contact information. Then call the collection agencies’ client and inquire on who the original creditor was. Once you’re provided that information, call the original creditor to make your inquiry.

What if the accounts have exceeded the statute of limitations?

If your accounts have exceeded their statute of limitations and you have no interest or ability to resolve them, just send a cease and desist letter.

I don’t see much of a point to sending a debt validation letter in this scenario. If anything, a debt validation letter could be counterproductive in this situation since it could lead you to a communication that could possibly renew the statute of limitations.

If your accounts have exceeded the statute of limitations and you’re trying to clean up your credit report, a debt validation letter may provide you some value in attempting to achieve your goal if the collection agency has possessed the account for less than 30-35 days.

The reason for the 30-35 day caveat has to do with the credit reporting requirements after the 30-day validation period expires. If the entity that is reporting the collection to your credit report has had the account for beyond that amount of time, they are only required to report the account as “disputed” rather than remove the item from your credit report.

If you’re in this situation, you may want to look into disputing the accounts that you question directly through the credit bureaus.

If your valid accounts have not expired from the statute of limitations, I personally wouldn’t send a debt validation letter until they do as you’re still exposed to the possible dangers that I outline in this article. In my opinion, it is not a risk worth taking.

If you are debating settling your debts, there are a fair amount of moving parts. Please refer to my 4-part series about how debt settlement really works to learn more.

If you are thinking about talking to your debt collectors, please see my article on how to talk to debt collectors prior to doing so. It will provide you with additional insight on how to approach your situation and what information they do and don’t have access to.

I hope this information pertaining to a debt validation letter helps you avoid putting a big bull’s-eye on your “valid” collection accounts.

I have pointed out a lot of the risks that people expose themselves to when sending a debt validation letter on a valid debt. Do you think it’s worth it? What are the benefits to sending a debt validation letter on a valid debt? Do the risks outweigh the benefits? I’d love to get your feedback in the comments below…

I was formerly one of the most successful debt collectors in the country. And don’t worry, I wasn’t one of those huffy-puffy types. I also held positions of Collection Manager, Corporate Trainer, and Director of Collection Operations. I’ve worked for large third-party collection agencies, collection attorneys and large debt buyers. (full bio)

I’ve dedicated my website towards truly explaining how debt settlement really works and to dispel the myths revolving around credit and debt.

Great article, Jared, and very useful to consumers who will take the time to digest the information. As someone who has coached thousands of consumers to settle their own accounts, I agree with what you’re saying about the use of debt validation letters. In my training materials, I do include a template for this type of letter, but with clear instructions on the limited range of situations in which it might apply. Nowadays, we’re basically only using this technique when the purchaser is one of the more aggressive ones (in terms of litigation) and the client also needs more time to raise funds for a settlement. Validation can still be a useful stall tactic, in other words, but should be applied very sparingly and only in specific situations. And it’s never appropriate to use a VOD letter with an original creditor, even when the OC has assigned to a third-party agency. That’s just a good way to get sued sooner rather than later!

Thanks, Charles! I appreciate you adding your input. It’s refreshing to see another professional who has inside knowledge, such as yourself, take a similar position.

I’m curious, why do you think just about every credit and debt website out there recommends to send these letters in all situations? As I have explained in my article, it is my opinion that this advice is leading sheep to the slaughter house…

In my opinion, the VOD tactic is so widely over-recommended due to the simple reality that people are afraid to talk to debt collectors, and a VOD letter provides an easy dodge. This is confirmed by the stat you quote in the article — 6 out of 10 debtors never answer the phone when collectors call. And as you know, many so-called “experts” advise to never ever talk to a debt collector on the phone.

This comes up all the time with my DIY debt settlement clients. “Do I have to talk to them on the phone? Can’t I just mail letters offering to settle?” A big part of what I do is just coach people to get over their fears of talking to debt collectors!

I completely agree. The idea of not having to have a conversation is very appealing to consumers who are going through a tough time.

However, as I’m sure you know, most debt collectors aren’t that bad to talk to. It’s unfortunate that consumers are given the impression that they are.

I will say though, that my clients commonly tell me that the conversation when I’m on the phone with them and their collector is a lot more relaxed. So I think debt collectors still need to work on being more approachable.

If you’re reading this and you’re a debt collector, I have one critical piece of advice for you: your success in the debt collection industry is 100% reliant on your perspective. If you view yourself as a debt collector, you’re not going to succeed anywhere close to your potential. If you view yourself as a problem solver, and do your best to avoid creating a confrontational conversation, you will move mountains.

I can confidently say that most people who are behind on their debts want to pay their bills. A debt collector’s job is to show (not tell) them how.

Anyway, I cringe at the thought of how many people who have relied on the advice of sending a VOD on a valid debt. I find it sad that people who just want to resolve things are influenced into this adversarial approach without realizing such.

I’d like to try to answer your question regarding other websites and why they recommend validation every time, strictly from a consumer point of view.

I’ve rarely had to deal with collections personally but have helped plenty of friends who’ve been in the lion’s den and I always choose the validation route regardless of the debt for, at minimum, one reason: to ensure they are entitled to payment.

If I randomly showed up at your house and demanded payment for a past due bill, you’d likely want to know that 1: such a balance exists, and 2: that I was entitled to collect it. I would treat any collector phone call or letter the same way. I don’t know these people and I didn’t incur a debt with them, so they need to satisfy my request to show that they are the ones that need to be paid.

There have been times where I’ve had an account go to collections only to find out that it was a clerical error. I thought I had paid it but wasn’t sure, so I asked for validation. Like you’ve said in your post, most collectors have little to no information to backup the claim on initial contact and they only learned of it when it had to be investigated.

I do sympathize with collection agencies in at least this regard: many of them are legitimate and respectful, but no one can dispute that there are some “bad apples” that have spoiled the bunch and tainted the industry’s name for the worst. I’d assume this is why most people are so defensive when it comes to collections.

Getting down to the skimmy of other websites regarding the issue, it’s a pretty safe bet that validation requests are sometimes recommended as a baiting technique. With the FDCPA being strict liability, sending a dispute and request for validation gives the collection agency more opportunity to violate the FDCPA – which happens surprisingly often, no matter how small or technical. Just one violation can give the consumer enough firepower to have the debt “go away” as it would be more costly to defend such an action versus the amount trying to be collected.

There are some pretty big name companies out there that have a tendency to try to collect debts by way of lawsuits, and, honestly, they are hoping for a default judgment which is the case 99% of the time. I’ve heard countless stories of people getting sued over a debt and should the consumer actually defend, usually one of a few things happens: 1) the collector immediately dismisses when they see it’s going to be defended because they don’t want to bother fighting, 2) the collector loses because they don’t have sufficient proof of the debt (hence they were hoping for a default judgment), 3) the consumer has a counter claim for FDCPA issues and has the case removed to federal court where the collector just wants them to go away, or 4) the consumer elects for arbitration (if applicable) and the collector drops the case because it’s not worth their time, effort or cost.

So, summarizing, many of these websites are attempting to help the consumer fight back against the common practice techniques of the “bad apples.” Unfortunately, sometimes the “good apples” get caught in the crossfire.

Do you believe there is a fix for this problem? I’ve always been one to believe that a collector should have all documentation to support their claim before they even send that first letter or phone call, but that would make the industry less lucrative with the costs involved. I’m sure many collectors would like to see the FDCPA adjusted to not allow such technical violations, but at the same time they have to still protect consumers from abusive practices.

Thanks for commenting. I agree with your reasoning about confirming the collection agencies involvement. You absolutely have to. Where we differ is the method for doing this.

As I cover and recommend in the article, I make this inquiry by calling the original creditor prior to verbally engaging the collection agency. By doing so, you’re able to satisfy the goal of making sure you’re dealing with the proper entity without exposing yourself to the risks that I outline in the article.

In respect to baiting the agency, I could see that. However, if that’s your goal, a collection agency is much more likely to violate the FDCPA if they don’t think you’re familiar with it.

Contacting a consumer after receiving a validation letter previous to validating it is a $1,000 violation. So if the debt is small I could see them extinguishing the debt in this circumstance. However, if the debt is larger than this, the violation would be more of a negotiation point than anything.

Additionally, I personally don’t believe, for consumers who desire resolution, that trading the exposure to the risks that I outline in this article is worth it in exchange for a mere possibility of them violating one area of the FDCPA. If the consumer were to blend in with the 96.8% of people who don’t send these letters, the potential for multiple and more meaningful violations is more likely. Not to mention, all while the consumer maintains their psychological advantage throughout the process. So in others words, you potentially gain a lot more without giving up anything in return. Regardless of the goal.

I agree 100% on the default judgment point. I cover that too in the article. However, sending a debt validation letter previous to being sued is foolish, because you’re right, in a lot of circumstances they don’t have all of the documentation that they need. So why send a debt validation letter asking them to get it?

In the event of a lawsuit, the more intelligent approach is to file an answer. This is when asking for these documents creates real value for the consumer without posing any additional exposure to the risks that I have explained.

I understand that these websites are just trying to help. I totally get that. And in other areas of discussion, I think these websites provide value. But, when it comes to this topic, I don’t believe that they’re familiar with the psychological dynamics that I have pointed out in the article. I don’t fault them for that, unless they have been in the debt collection industry they would have no way of knowing otherwise.

In respect to a fix for the problem, with all credit due to the CFPB, a fix is already in the works.

Here is another video from the FTC workshop pertaining to that:

This is a clip from the FTC’s recent workshop on Debt Collections.

Dave Pauken, CEO of Convoke Systems, discusses how his company acts as a conduit for documentation between original creditors, junk debt buyers and collection agencies.

Thanks for this info. I’m admittedly over my head, and just want to improve my credit score/report.

I have two things that I need to pay (one if in collections). They are fairly small amounts ($243 and $100). I got the advice to just sent a validation letter, and was filling out the template today and then came across this letter. I have the money to pay them off now, so should I just call them and pay it over the phone?

I didn’t know that it seemed aggressive to send the letter. I just thought that it was protocol since I keep seeing the same advice. But your article made me pause. I have one bigger item ($5000) from years ago but I don’t see it on my report other than that just student loans (that I had in deferment but now making on-time payments).

I don’t have the type of debt where I feel I need financial counseling but there’s so much conflicting information out here it’s confusing. Anyway, thanks for sharing your knowledge.

My pleasure, Candace. I really appreciate your point about not knowing to think about these things. That’s the entire reason I spent so much time preparing this article. Apparently, almost no one knows!

Granted, in your situation, owing sub $500 accounts with the desire to pay them in full immediately, the risks that are demonstrated in this article don’t really apply to you.

It doesn’t matter that you psychologically identify yourself to them as being part of the 20% that will pay, because you’re not trying to negotiate a discount.

And the risk of an increased likelihood of suit wouldn’t exist, because you plan to pay them right away. And, if you didn’t, your risk of suit would be low, because the balances are so nominal. Some entities will sue for a sub $500 balance, but they are few and far between.

To answer your question: yes, paying a collection agency can be much more simplified by just calling them and paying them. It definitely isn’t necessary to send a debt validation letter prior to doing so.

Although, I would confirm the collection agencies involvement prior to paying them: just call the original creditor and ask them for the name and number for the collection agency that is handling your account.

That’s who you want to pay.

Candace, this is the part where you gain value by not sending a debt validation letter.

When you call the collection agency, ask them if they will delete the account from your credit report in exchange for full payment.

You never know, they may do it. Although, most don’t, so don’t think anything of it if they won’t. It’s just worth asking is all.

But my point is, that logically, if you don’t create an adversarial relationship with them, they will be more likely to comply with the above request because they will be more likely to want to help you. Look at it like someone who gives you a hard time at your job. Are you going to go out of your way to help them? It’s the same principle.

If they agree to delete the account from your credit report, ask them to fax or email you a letter that states such.

30 days after you pay them, you will want to follow back up with the collection agency to obtain a “zero balance” letter. A zero balance letter is basically a receipt that explains your account was fully resolved.

Good luck to you! Please feel free to reach back out if you need to. Have a great night.

Thanks for this article Jared! I was in the process of typing my validation letter to my debt buyer, and was looking for suggestions for less adversarial sounding letters when I came across your advice. This whole process now makes sense to me, and I will definitely not be sending the letter! The debt I’m being contacted about IS valid, so the letter didn’t really make sense to me. I’d like to resolve the issue and move on, but I do have a question for you. The debt is not very large, just under $800. I received a notice last month indicating that the buyer will settle for 15% less than the debt owed if paid in one payment. I didn’t respond, and received a notice this month that they’ll now settle for 20% if paid in one payment. My question – do you think I’ll realistically be able to negotiate a lower settlement, and if so, what would be that realistic percentage? I have 60% in hand that I could pay now to settle. Do you think that would even be entertained by the buyer? Thanks for your help!

Jared, thanks so much for the informative article. Was just about to send the validation letter based on recommendations from several other websites. Got behind on a bill after being out of work for a while. Nice to know you have options and rights when trying to settle your debt and make things right.

It seems your advice is falling right into my lap in the nick of time!

I will keep my story short: Back in college (2009) when I didn’t have any health insurance I made a hospital and orthopedic/physical therapy visit to my local hospital. In 2011 I received a phone call from someone attempting to collect for my doctor’s visits–I paid around $350 in full.

In March of 2014, I accessed my Trans Union credit report for the first time ever in my life and discover 3 accounts in collection (2 from one company, 1 from another all three totaling $500). These three accounts are debts owed to the hospital and NOT to the doctors (which I paid in 2011).

One company agrees to send me a statement of what I owe, the other company (where I have 2 open collections) does not agree to send a statement. Instead, they state that they sent a statement back in 2011 and, since they did not receive any return address information, are not obliged to send another notice that I owe.

The kicker: the notice they sent in 2011 was possibly linked to my grandmother’s collection accounts (as we share the same first and last name and, up until 14 months ago, the same address). When I asked for a statement or validation of debt from the collector for my account, he refused (adamantly) to send one to my new address.

Is it possible to still receive another validation of debt and/or statement from him three years later? I am willing to pay in full, but would like some proof (other than my credit report and word of mouth) that I owe. My concern is that yes, the agency did send a statement in 2011, but that it was tied up with my grandmother’s notices and that I did not receive proper notification. Upon my recent contact with the collector, he admitted that my and my grandmother’s accounts were connected and I listened as he typed away to separate them by birth date in his system.

It sounds like you’re dealing with a more mom and pop type collection agency. Any reasonable collector would fulfill your request for a new letter.

Especially when the collector is familiar with the dynamics of you and your grandmother sharing the same name. And it’s not like you’re making the request for a simple collection letter to stall or anything, after all, you’re calling them!

I hate collectors like this. Call me tomorrow if you want. I’ll call this gentleman 3 way with you to get to the bottom of this. No charge. Have a great night!

You are slime, sir.
I don’t give a care who the collection agency is. All they are is a company who decided to buy factors. And now they are trying to make money off of what they bought via intimidation. No one FORCED them to buy out my account. The employees that run the collection agency is made up of people who couldn’t find a real career.
So why should one fear them, fear attention being brought to you?
Sounds like you are one of these people.

Hi Jared,
I just got a letter in there from a collection company. The debt is valid, but only for a small amount of $40.00. The letter is saying to sign the bottom and send it back to them to validate the debt. I am not sure what I should do. Would I still be able to pay the OC or do I just called to negotiate the debt? Ex. Pay to Delete. I also have a few other collections on my credit report mostly medical. One is for $300.00. This one is strange because I had two different types of health insurance at that time. So I am confused why it didn’t get cover. Not sure where to go with this account. Any information would be great! Have a great day.

I think you guys are missing the point. Many consumers are concerned very little about “settling debts.” Contrary, their primary goal is mainly to have negative information removed from their credit reports. Often times, settling a debt does near to nothing with respect to increasing one’s credit score.

Debt validation letters, as you mention in your article, will result with removal of a negative tradline almost 50% of the time. That is reason enough to consider the tactic, especially if a debt is invalid.

I didn’t see a publish date on this blog post so I wish this was out there last fall when I sent one such validation letter. The debt was for less than $1000 and they haven’t responded but I just ran my free credit report and noticed they posted a note that the debt is “being contested” so that’s interesting. Now that I’ve read this I will not be deploying this tactic in the future, except in the rare case that it actually isn’t a “valid” debt.

That said, I have dealt with one collector while trying to do the right thing and pay down the debt. The first person I spoke to was pleasant and professional. I then got escalated to a “manager” to confirm all the details. This is where everything went sideways. When I made the agreement to the payment there was no mention of a payment processing fee, however, this manager informs me after I agreed to everything else thinking my $50 per month was going 100% toward the debt that they are actually going to deduct an $8 transaction fee per month but would be willing to waive it if I paid in full right now but since I’m paying monthly he wasn’t going to budge. High pressure, plenty of squeezing, and they already had my bank information. I protested, stating I don’t mind paying the debt I owe but I’m not paying their fees, they should have got them from whomever they bought the debt from. Their logic “well your state allows us to charge a fee”. I continued to protest so he threatened to cancel the deal or hang up and call my wife to see if she would be more reasonable and willing to deal. Things got heated and it didn’t go well. I allowed them to draft one payment that night and I called back the next day to cancel the deal. They stopped calling me but are now trying to call my wife instead. This is obviously and example of what not to do.

This is EXACTLY why people don’t want to talk to debt collectors. You know what they say about one bad apple. In the debt collection world, there isn’t just one bad apple, there are bushels. I refuse to speak with any debt collector unless I know I have the cash on hand to settle it in one shot, get the certified letter stipulating the terms and cutting them a check. I don’t trust that the next one I talk to is going to be remotely reasonable.

As an insider I hope you continue to try to advance the cause of changing the debt collection culture to view themselves as solutions providers instead of the adversarial tactics that seem to be more common. You have a tough row to hoe.

I will definitely read through your blog and see what I can do to help myself out of the few jams I have left to work through. We’ve started working a debt snowball and have a plan for getting out of debt. This also means we are not in the market for a car or a house until this mess is cleaned up. Thanks again for the post. Glad I found it.

I hear you loud and clear. Reason and logic escapes a lot of debt collectors. It’s crazy how a lot of them really don’t understand their job. It’s so silly to me on how they don’t realize that when they conduct themselves in this manner that all they do is alienate the consumer and create reasons for people not to pay.

In respect to the situation that you described, I would just get the collection agencies mailing address and mail in your payments.

I’m not an attorney, but I personally think that requiring you to pay the fees is in violation of the FDCPA. It is unlawful for them to cause you additional expense in an attempt to collect a debt. In my opinion, that’s exactly what they’re doing in these situations.

Especially if they don’t present the option of mailing in the payments as a way to avoid the expense.

I’d like to think that I’m advancing the cause when I’m on the phone 3-way with them and my clients. From the feedback I receive from my clients, it’s an entirely different experience as compared to when they spoke with the collector without me.

I hope you find the rest of my blog helpful. Please feel free to reach back out to me with any questions. Have a great day!

I have been rebuilding my credit for the past 2 years. My score was 526 and I worked extremely hard to get all of my past debts paid. I now have 2 credit cards and a car loan. I cleaned my credit in preparation for being able to purchase a home this year. I have not missed a single payment in 3 years on any existing credit and things were looking good until today, I recevied an alert from Experian that something negative hit my report. I logged on to find a collection agency, IC Systems for the T-Mobile account that I had 4 years ago. I had no knowledge of this collection agency and had they called me prior to placing on my report I would have paid them. How can collection agencies not send a letter or a call to let you know they have this debt prior to placing on your report? My score dropped 34 points in the blink of an eye and now I am totally distraught because there goes my chance of purchasing a home. What can be done?

If I were you, I would call IC System and inquire if they sent a letter to you. If they have, ask them which address they sent it to. If it’s a different address, explain that you were never notified about this account and that you would like to take care of it if they agree to remove it from your credit reports.

If the collector explains they can’t do that, ask for a manager and make the request again with them.

If you can get them to agree, ask them to provide you with a letter in writing.

Keep in mind, it’s best to have a very friendly tone so they will be more apt to want to help you.

For more detailed information, check out the methods that I pointed out in this How to Pay For Delete article.

Thank you for providing such detailed information. It is very helpful coming from someone who knows the debt collection industry. I actually have a judgment against me from 2008 when a credit card company sued me and I did nothing about it. Just a few weeks ago, I received a letter from a law firm who apparently bought the debt. They are asking for about triple the original debt amount to the tune of over $3500.

I was considering asking them for a debt validation letter in the hopes that the debt has changed hands so many times maybe they couldn’t prove it and wouldn’t pursue it further. Would there be a disadvantage to sending one or is it pointless? Also, I have limited funds mainly due to raising a special needs child by myself, but if I was to scrape together $800 or $900 and make them an offer to settle for that at the end of the month, do you think I have a chance of them taking it?

I don’t believe a debt validation letter will help you at all in this scenario. They should be able to validate the debt with a copy of the judgment.

A possible avenue that you could take if you were never served is to hire an attorney and contest the judgment. However, that will more than likely be an expensive proposition.

In respect to how negotiable they may be, that will depend on how collectable you are. Do you own your home? Are you a W2 employee and live in a state that permits wage garnishment? How much other debt do you have? Do you have paid or settled collections and charge offs on your credit report? Do you have a recent mortgage or auto inquiry appearing on your credit report? These are the things they look at. Every yes answer to those questions tightens their flexibility.

As far as a range is concerned, you’re looking at a fairly broad one: on judgments 30-80% typically.

I like your thought process about calling at the end of the month. If I were in your shoes that’s what I would do. Just make sure to make the offer in a what if scenario.

“What if I could come up with $800? I’m not sure that I can, but what if I made some phone calls to look for it… would that be enough to settle the account with you if I can find that much right away?”

Please feel free to follow up with any additional questions. I hope you’re able to resolve the judgment for an affordable amount. Take care.

Thank you for the advice, I was also just about writing the validation letter , when I came across your site, like so many of other people who previously posted their question. Well, here is my issue: I just received a letter from a law firm with the intent to collect my credit card debt of $3499/ It is actually around $2900 but with fees and late fees and attorney’s fees, it sot up to almost to $3500. In my case, it seems like, they DIDN’t BUY the debt, just acting as a collection agency on behalf of the bank. I don’t find much reference or articles on the net with this scenario. Everybody is talking about agencies who buy the debt for pennies on the dollar. What about these law firms? I am very uncollectable right now due to an illness and job loss and I indicated this to the C/C company before charge-off but it didn’t make any difference. Previous to the law firm, I received and talked to URSI, which is a collection agency but not a law firm. URSI also indicated that they DIDN’T BUY the debt…
How to proceed with these firms? Is it becoming more common for C/C companies NOT TO sell their charged off debts?
Are they more likely to sue? I don’t understand how I ended up in that 6-8% / Just by communicating with URSI? Then why did they passes me on?
Thank you in advance

No problem, Eileen. I’m sorry to hear about your illness. I hope you will recover soon. I went through a similar experience about a year ago – inguinal hernia – and I’m just now, for the most part, returning to normal. So hang in there! It will get better!

On a side note, I would just like to thank everyone who has participated in the comments. I find it exciting to see all of the particular circumstances point to a common denominator: People who fall behind, do so, not because they want to, but because they have to.

I found this to be true for myself, after speaking with tens of thousands of consumers, back when I was in the collection industry. I think it’s neat that everyone who reads this blog gets to see that too. Cool stuff.

Let’s tackle these questions…

Is it becoming more common for C/C companies NOT TO sell their charged off debts?

The winds have definitely changed direction over the last 18 months or so. What’s happening right now is that the collection industry is being turned upside down by the Consumer Financial Protection Bureau. The videos in this post were part of their process: if you haven’t watched the videos, you should. There is a bunch of good information contained in them.

Anyway, the CFPB didn’t like some (probably more like a lot) of the compliance standards that were employed by some debt buyers and sellers when it came to who they would sell their debt to. While the intervention of the CFPB continues, a lot of original creditors have elected NOT to sell any of their debts to junk debt buyers until they are 100% compliant with the CFPB’s standards.

At this point in time, it may be deemed by the original creditors, to be too premature to start selling again because the collection industry is waiting on the CFPB for their rules. I suspect that this trend will probably continue until they issue the rules and the mechanisms to achieve compliance are in place.

Are they more likely to sue?

It was my experience, when I was in the collection industry, that when original creditors maintained ownership, they were more likely to sue if they received a debt validation or a cease and desist letter on a valid debt.

Again, based on my experience, I believe original creditors as a whole sue less than 6-8%. However, there are some original creditors that are more litigious than others – like Capital One and American Express.

I don’t understand how I ended up in that 6-8% / Just by communicating with URSI?

I need to ask you a few questions to make sure that you are even part of the 6-8%. You may not be if all you have received is a letter. Unless it was certified?

I have several collection agencies trying to collect on payday loans from 2 yrs ago. I know that I got the loans and made several “interest “payments on them at the time but since I had several at that time and couldn’t let them keep taking money out of my account I cancelled by bank account. My question is since I did make several “interest ” payments to them probably more than the original loan can I not argue that i’ve paid them enough money in interest to have them stop persuing it? But now that a 3rd party has it to collect, shouldn’t I make them validate it?

Hi Linda, I feel for you. Payday collectors are definitely the worst. The first thing you should do is make sure that the payday loans are even legal. In a lot of states they may not be. I recommend that you start your research here.

I had an outpatient surgery in February 2008 in Ga & lived in Fl at the time. I was on disability because of my condition & had medicare/medicaid & was part of vocational rehab. I was told everything would be covered & it was or so I thought. Last month I received an bill from the area where my procedure was done asking for thousands! It’s been 6 years, they say they have generated & mailed the bill every month since the procedure but I find that hard to believe & 4 years after I moved to AL & got married. So which states statute of limitations applies to this medical bill? They say because it’s so old it must be sent to collections despite me never hearing from them.(they claim they had no insurance ever filed but really they should have) also they recorded calling me in March 6 2012? I’d had the same cell# for years. I know they’re building a new hospital so no way to know if they just want more money to fund that venture. I did ask for an itemized bill…I’m not sure if that’s similar to debt validation? Also seems like it’s in house collections right now. She asked if I was disbuting the charges I didn’t say. She said she could only give me 30days before turning it over I assume to a debt agency.

Sounds a bit stressful. Determining the statute of limitations in a situation like yours can be very tricky. I would definitely reach out to a local attorney in your area that specializes in FDCPA defense. If you can’t afford to do that, then try a local legal aid office to see if they can assist you with figuring the statute of limitations out.

The reason why you need to reach out to an attorney is a lot of your questions are open to interpretation and a local attorney should be familiar with how your local judges view such things.

Also, previous to doing that, you may want to call your old medicaid office and inquire on whether or not you can be held responsible for the debt. If I recall correctly, I think medical providers that accept medicaid agree to accept the amount that is paid to them via medicaid as full payment.

Is it possible that the medical services you were provided didn’t fall under the medicaid scope? Or did the ball get dropped and was the claim never filed with medicaid to begin with? If the ball did get dropped, is it too late to file the claim? If it’s too late, who should be held accountable for that – you or the medical provider? These are the questions, amongst others, that you will want to ask when speaking to the medicaid office.

Good luck to you and please feel free to reach out to me if you need to. Have a great night!

Hi Jared, your site has helped me a lot as well. I have an old debt from Tmobile thats abount 4 years old, I havent heard anything until last month I got an alert that negative info was reported and my score dropped about 30 points. I had just spent the last 5 months cleaning it up and was able to build it up to 658. Now, does the clock start over, now that is has been bought by this company? I intend on paying it, however they do not delete. When I do pay will this also restart the clock on the debt?

Thanks, Annie! Great questions! This is one of the biggest misnomers on the Internet when it comes to credit and debt.

The credit reporting clock DOES NOT restart in either of your scenarios. In fact, the only time it would restart would be if they obtained a judgment against you. Which in your situation, for a $400 Tmobile bill, is highly unlikely.

Hi Jared,
Would like to hear your thoughts. While living in Illinois I had a company provided rental car which I used on the tollway system. I have since moved to Wisconsin and while making a car purchase discovered I had some collection accounts totaling ~$500 from an agency associated with the tollway. I had contacted them at one point but was not able to get confirmation that if payment was received it would be reflected on my account. And definitely wasn’t able to get pay to delete confirmation.

I have the funds to pay, that’s not the issue, just don’t know the best approach to ensure the money will be applied properly and how best to move on from this. Thoughts?

If you look at your credit report, the account number for each account should be located directly below the name of the collection agency on each trade line.

I would call the collection agency to confirm these account numbers are complete and accurate. Then, I would get separate money orders for each account and place the corresponding account number on each money order.

I would then send all of the money orders in the same envelope along with a quick note explaining that you have multiple accounts and that multiple payments are contained in the envelope.

A lot of collection agencies won’t agree to a pay for delete. However, ask for a supervisor while you’re on the phone with them confirming everything. Explain your situation to them and ask them if there is any way they can work with you in respect to deleting them. You never know and it doesn’t hurt to try.

Good luck to you and please feel free to reach back out to me if you have any additional questions. Have a great day!

What should you do if the collection company re-aged the debt? Say you have a valid debt that the last payment was made in 2007 before it was sent to collections and you’ve never made a payment on it since it went into collection nor have had no contact whatsoever with the collection company. When you try to apply for a line of credit and it shows up as lasted reported activity in 2010, is that not considered re-aging? Especially if it shows it’s still with the same collection company but you’ve had no contact whatsoever with them since the debt went into collection. Sorry if what I wrote seems confusing, I’m confused about the whole situation myself lol

Just so you know making payments or communicating with the collection agency has no bearing on how long they can report the account to your credit report. They can only report the account for the standard 7 years and six months from the original date of delinquency.

The only time they can extend the reporting period is if they obtain a judgment.

If I were in your situation I would dispute the account via the credit bureaus. Go to annualcreditreport.com and order all 3 of your reports. On the online reports themselves there should be a link to dispute your accounts.

Per the FCRA (Fair Credit Reporting Act) the collection agency will have 30 days to respond. After the 30 days expire, you will receive a letter from each of the three credit bureaus advising you of the outcome.

This should do the trick in your situation. If it doesn’t, then you may want to consult with an attorney that specializes in the FCRA to become familiar with what legal steps you could take, because yes, from what you have described that is considered re-aging and it’s an illegal practice.

Please feel free to follow up with me should you need to. Good luck and have an awesome day!

Jared, awesome information, I appreciate the time it must have taken to put this together. I wish I wouldn’t have to comment to ask a question after your hard work, but I must…

I’ve been trying to be more credit conscious lately, I’m 27, wanting to buy a house in the next 3 years. I have pretty bad credit, 540-550 (though credit sesame says 635). I don’t have credit cards, these are mostly just old, small debts. A couple I’m not even sure of what they are.

I have about 6-8 derragatories on my reports, all between $50-300. One apparently is medical related. I’m no credit expert, but I’m pretty positive that’s causing some huge damage. I have no credit cards, I had a loan that was paid off with no missed payments, and I’d like to really increase my scores.

Would a debt validation letter be ideal in a situation like mine? I believe a few will probably drop off in the next year. My concern isn’t really paying money I owe, it’s not a lot, but I’d like to have some stuff removed. If a debt validation letter would accomplish that, for such a low amount of money, shouldn’t I give it a shot?

Hi Nathan, thanks for your kind words. Since your balances are so small, I would definitely agree that the psychological and increased litigation risks that I point out in the article aren’t relevant to your situation. You’re 100% correct with your logic.

However, if these accounts have been at their existing agencies for more than 30-35 days, you’re more than likely going to experience a problem when sending debt validation letters.

When you send a debt validation letter after the 30 days has expired, the collection agency is not required to remove the account from your credit report. They’re only required to mark the account as “disputed”, so it still remains.

Furthermore, if your goal is to buy a home, it’s probably going to be via a mortgage that is backed by the Federal Housing Administration. FHA’s most recent guidelines towards delinquent disputed accounts is: “If the cumulative outstanding balance of disputed derogatory credit accounts of all borrowers is equal to or greater than $1,000, the mortgage application must be downgraded to a “Refer” and a Direct Endorsement underwriter is required to manually underwrite the loan as described above.”

That doesn’t sound like the solution you’re looking for. So if these accounts total more than $1,000 and they have been with their respective collection agencies for more than 30-35 days, my best advice is to read this article about pay for deletes. The worst case scenario if you employ the strategies in that article is that your accounts end up being paid and you begin to recover.

I can’t be clear enough about this: the secret to repairing your credit is to create new credit. The only way you’re going to get more desirable, new credit is if you resolve ALL of your delinquent debts. Any lender that you would actually want to do business with generally doesn’t extend credit when there are delinquencies that are unresolved.

If you decide to employ the strategies that are outlined in the Pay for Delete article I linked above and you fail to get any of your accounts deleted, it is best to wait about 6 months after the accounts have been resolved and apply for a new credit card. Capital One is a good place to start.

When you qualify for one, it will be just like it was when you were 18. Your credit limits will generally start out around 300-$500.

Just make your payments on time and they’ll raise your limit generally in 6-12 months. And like it was when you originally built your credit, you will start qualifying for other cards soon thereafter. Your overall goal is to have 4 new cards and to maintain balance-to-credit-limit ratios of less than 30% on them.

The purpose of these cards is not to go into debt again. Their purpose is to feed data to the FICO machine in an effort to increase your score so you may qualify for home and auto loans at reasonable interest rates in the future.

Please feel free to reply with any questions. Good luck, Nathan. I hope everything works out well for you. Take care.

Jared, wonderful article. Very helpful! I too have a question, but I will post separately.

I just wanted to share that I at one point had 8 derogatory accounts in my credit report and these were collections agencies. I did what most of us have done and sent validation letters; however, before I did that, I read an article about checking to see if these collection agencies were even authorized to collect in your state. It seems that they require to have a valid license/security bond and you can actually look up this information in your State’s secretary of state website.

I found that most of the collection agencies reporting in my credit report were not even legal to collect in my state and I was able to dispute this directly with the credit agencies and had them removed from my credit. Anyway, I hope this helps you.

Also, if you can’t tell by now, I’m a pretty cautious guy, for people whose accounts are still within the statute of limitations, I would be careful about employing this strategy previous to the accounts expiring. Whenever a collection account changes hands, there is always the risk that it could end up at a local attorneys office. Just something to bear in mind.

Oh man DC!!! you are my hero! I’m dealing with one of the worst apples in the credit collecting industry and my state does require licensing to collect debt. This is the only collection I have and it is the only thing holding me back from a mortgage. Thank you Thank you!!!!

Hi Jared,
I recently got married. My wife had a debt with citibank over for over 10 thousand dollars. She explained to citibank in 2010 that she could’t make payments due to unemployment. Eventually they kicked her off the account, her DOFD is 3/2011. We live in Maryland, and the SOL is 3 years. She has been ignoring the collection agencies, I believe now it is Midland. She doesn’t have the money to pay and could care less if she has bad credit for 4 more years.
I know morally this isn’t right, but she ignores my advice to settle with them.
What are your thoughts?
Thanks.

I have recently been contacted by a law firm concerning defaulted student loans for a total of about $27,000. They began by asking for payment in full (yeah right) and then said that I could make a down payment and monthly payments. These loans went into default in 2008, when I was still in school, because my cosigner filed for bankruptcy. I never received any correspondence from them demanding payment in full until now.

I told them over the phone that I wouldn’t discuss any payment arrangement until I receive some documentation of the debts. I received 3 letters today for each of the loans showing the balances as of April 22, 2014 and the current creditor. They also stated that I had 30 days for debt validation, as you discussed in your article. I’m tempted to send them a debt validation letter, primarily to determine the exact month and date that the loans were defaulted and to see whether or not the statute of limitations (6 years in Alabama) has expired.

I’m guessing the student loans are private? This is a very important piece of information to figure out if you’re not sure. If they’re private, they’re subjected to the statute of limitations. If they’re federal, then they’re not.

In respect to determining the date of default via a debt validation letter: I wouldn’t use that approach personally.

Instead, I would reach out to the original lender via a phone call to make the inquiry. I would also pull full credit reports from all 3 of the credit bureaus to confirm the information. The best place to do that for free is at annualcreditreport.com.

You may also want to reach out to an attorney to get a legal opinion once you acquire this information. Just to be safe and so you can be confident about your next move.

Thanks for the great info! I was preparing a DV letter when I stumbled upon your article, and now wonder if I should proceed.

My wife took some classes at the state school here in NY. She never received a bill for the classes, but knew what the approximate total would be. She recently received a letter from the Attorney General attempting to collect the debt, with approximately $1,100 in late fees & interest. We contacted the office via phone and mail requesting a copy of the original bill as well as an explanation of the late fees, but have only received new letters demanding payment.

How can I force them to send a copy of the original bill? We are willing & able to pay in full, but not until we understand the charges.

My pleasure. This situation smells a little fishy. I’ve never heard of an Attorney General collecting on debts. I would call the New York State Attorney General to confirm this.

I wouldn’t use the phone number that you have already been provided, but instead I would google the NY AG to acquire the number directly from their website.

There are some shady companies out there, so you need to be very careful. If you find that this company is posing as an AG, when in fact they’re not, I would turn them in while you’re on the phone with the NY AG.

Please feel free to reply with any additional questions. Have a great day!

Thanks for your response. It is indeed legitimate. Apparently the state colleges use the Office of the Attorney General as their debt collectors. And I verified phone numbers and address info given in the letters. So my question remains, any advice on how I can force them to hear my requests? I would imagine there is no harm in sending a DV letter since we intend to pay the debt upon verification. Do you agree? Thank you very much for your time.

Hi Jared
I was thinking about the validated debt letter approach to clean up my credit profile. Your article is helpful.

In 2011 I loss my job and fell in to hard times when my Unemployment ran out in Texas. I had to break my one year apartment lease. I lived htere for nearly 3 years and the landlord was not flexible in granting me a 6 month lease so i had to sign a one year lease.

Anyways I panic and skipped out after 5 months. My rent was only $1000 per month butwhen I look at my credit report the landlord is claiming over $10,000.00 in debt with the collection agency.

Now it is 2014 and I am in California. I live under my wife’s lease so it has not affected me lately. But my wife and I maybe separating and I will need to qualify for a lease on my credit score. Should I wait for the statue of limitation after 3 years to remove it from my credit report is the best way to handle this so it doesn’t reset the collection and spawn a lawsuit.

Or this debt has to be settled to move forward with my ability to lease anywhere.

I definitely wouldn’t send a debt validation letter right now. It looks like you have another year to go before the statute of limitations for a lawsuit will expire. The last thing you want to do is draw attention to yourself before that happens.

If you’re not in a position to settle it, there are many private landlords out there that rent to people without pulling credit. Personally, I would recommend looking for a place to live from one of them. Craigslist is a good place to start.

If you would prefer to settle it, please feel free to call me and we can discuss the particulars further. Take care.

Jared,
Thank you for this very informative site. Within days after my wife and I got a pre-approval to buy a house last month, we received a letter in the mail from a collection company claiming that my wife owes approximately $500 to a hospital in Michigan. They offered to settle this more than 7 year old alleged debt for 50% of the amount. We moved out of Michigan in summer of 2007 and currently live in Missouri. This is the first time we’re learning of this alleged debt. If we owed anything, it should have been covered by our health insurance.

We already found a house that we like and are closing on the mortgage in less than a month. My wife has excellent credit (all three FICO scores are >740) and this collection is currently not listed on any of the credit reports. Because banks re-check credit reports right before the closing, we’re extremely worried that if this shows up on her credit report, it might delay or derail the closing. The collection company said that if we don’t respond within 30 days (10 days from now), they will assume that the debt is valid. What do you suggest we do?
Best,
TJ

My apologies for the delayed response. Your concerns are just. If the collection account does show up previous to the closing it probably will cause you some problems.

Here’s what I would do in your situation: I would call the collection agency and ask them for the date of service. On medical collections this is when your clock generally starts ticking.

The collection agency is only allowed to report the account to the credit bureaus if it is less than 7 years and 6 months old per the Fair Credit Reporting Act.

If the account is older than 7 years and 6 months, you shouldn’t have anything to worry about.

If the account is less than 7 years and 6 months old, they may report it.

If it’s less, I recommend that you ask the collection agency what the charges are for. If you find them to be valid, I highly recommend to take care of it before they report.

If you feel the charges are not valid, then I would send a debt validation letter.

In respect to the insurance, unfortunately insurance companies are responsible to you and not to your creditors. Meaning: that in a situation like this, if there is any claim to be filed, that you are the responsible party that must handle that. Not the collection agency nor the original medical provider unless the insurance is for Medicaid or something similar.

I would imagine that it may be too late to file an insurance claim at this point considering the age of the account, but if you can, the proper course to take is to pay the collection and to seek reimbursement from the insurance company.

Please feel free to follow up with any questions. Have a great day and good luck to you guys.

I appreciated your article and was definitely considering this option myself. I am a recent college graudate and am working on getting a savings together and cleaning up my credit so I can start looking at purchasing a home around this time next year. Although I do have quite a few accounts in collections (about 8 or 9), they are small debts ranging from $13-$168 and are either medical or related to a parking infraction/unpaid toll.

My goal is to call each debt collector and pay each of the debts off one by one upon each paycheck I receive. Is this something you would advise? I have credit monitoring through Equifax and am trying to figure out the most efficient way to start and it seems like the easiet thing to do is to just pay everything. Any advice you have is appreciated. Thank you!

Your plan is good. I would familiarize yourself with this pay for delete article before moving forward.

Pay for deletes are fairly rare, but worth the effort.

Also, the quicker you can pay them all off, the better. Your future creditors generally look back 24 months, so the quicker you can resolve the accounts, the quicker they will be out of that 24 month window.

Please feel free to follow up with any additional questions. Good luck to you! Take care.

Thank you for the article. Like the other commenters, I was perusing for information on sending a debt validation letter. Within the last year, I’ve had four medical collection accounts from 2010-2011 show up on my credit report. I’ve have (or had prior to this) excellent credit, so this is quite distressing. As I had 100% health insurance coverage at the time, these accounts are certainly an error. I’ve never received any communication from the collection agency (same agency for all accounts). I’ve contacted the medical facility, which directed me to the collection agency. I initially disputed the debts with the three major credit bureaus – one deleted all of them, the second refused to delete any of them and the third deleted two of the accounts. I sent a letter to the collection agency for each account (via cert/return receipt & reg mail) advising that I would pay ‘xx’ (I believe I offered 50% for each) in exchange for deletion off my credit account; however, I requested written confirmation of the acceptance w/in 30 days of receipt or I would require verification of the debt. (I can’t imagine they will be able to provide, since all bills were/should have paid by insurance. If they weren’t paid due to incorrect submission by the provider, I don’t have the information on which to have them resubmitted). It’s been over 30 days, and I haven’t heard a thing. My latest credit reports have been updated and the accounts are now listed as “Subscriber reports dispute resolved – consumer disagrees” or “Dispute resolved; customer disagrees”. I haven’t issued any payment as per my written offer to the creditor, and I haven’t received any written confirmation of acceptance from them, although I do have proof my letters were received. At this point, I was going to follow through and request the debt verification. If they failed to provide it within a reasonable amount of time (30 days was going to be my request), I planned on disputing it again with the two major credit bureaus. Now I’m not sure if that’s the right thing to do, especially after reading your article. Any insight? Thank you very much!

I hate to be the bearer of bad news, but unfortunately insurance companies are responsible to you and not to your creditors.

Medical providers do often times file the insurance out of courtesy, but they are not required to do so.

If I were you, I would reach out to the medical provider and talk to their billing manager. Explain that you were under the impression that you had fulfilled all of your responsibilities to them. They will probably go on to say something similar to what I stated above.

If they do, explain to them that you had no idea that’s how it worked and ask them if you agree to pay the accounts immediately, and to seek reimbursement from the insurance company, if they would advise their collection agency to remove the collections from your credit report.

This approach is your best bet. If it doesn’t work, I would read this pay for delete article, so you may familiarize yourself with how best to approach that angle.

Please feel free to reply with any additional questions. Good luck to you and have a great day!

I received a letter in the mail today from a collection agency stating that I owed a debt of over $25,000 to an ‘original creditor’ that I’ve never heard of before.

I called the number on the letter to find out what it was about and a woman who failed to give me her name said that the debt was from a credit card with an original balance of $10,000 dating back to 1994. She said the last activity on the account was in 2003.

I told her I had no idea what the debt was, but it wasn’t mine and she then threatened to take me to court. Then she started abusing me with statements like “so this is how you handle your bills you just run away from them”…. I finally hung up.

The letter I received stated that I should write to them and ask for debt validation, which I almost did. But I decided to research the matter and see if that was the best idea, which is what led me to your website.

Thinking that maybe someone had stolen my identity, I checked my credit report (I couldn’t get all three on-line, but I did get one and asked for the others to be mailed to me) and there was no record of this debt.

My only income is social security. My husband died two years ago so I have very limited resources and can’t afford to hire an attorney.

I swear that I have never had a credit card from the creditor that this collection agency is claiming I owe money to. As far as I know, I don’t owe any money to anyone.

Statute of limitations in Florida is 4 years for credit card debts. From the debt collectors own admission the account is approximately 11 years old. Based off the information you have provided to me, even if you did owe the debt, they can no longer successfully legally pursue you for it.

If I were in your shoes, I would send them a cease and desist letter.

Please feel free to reply with any additional questions. Have a great day!

Since then I haven’t heard from them, not even a peep. They probably don’t wish to waste time on a dead beat. The debt is mine, I just can’t pay it. I could care less about my credit, I’m not worried about a home loan pre-approval since I never have been financialy able to afford one anyway. People get so worried about their credit score, some even brag on how high theirs is. I don’t care if a lender thinks I’m worthy of the extent ion of fiat money created out of thin air. A lender is the worst scum on the face of the earth, I guess it takes one to know one.

You’re not a dead beat, you’re just going through a difficult time in life. Eventually, things will get better.

As I point out in the article: The characteristics that define the most “collectable” accounts to a junk debt buyer or collection agency are accounts where they have confirmed any of the following: your place of employment, open checking or savings account, home ownership, paid or settled charge-offs on credit reports, and high credit and collection scores.

It doesn’t sound like any of these apply to you, so you’re probably right in the sense that they don’t feel that you are worth pursuing.

Chances are that you will hear from another collection entity in the future as collection accounts typically change hands every 6 months or so.

Hi Jared,
unfortunately, i discovered your website AFTER i requested a debt validation letter on behalf of my son. They did send validation of all credit card statements (creditor CACH/OC: Bank of America). Originally this debt was with an out of state collection agency, then recently turned over to a “law group” in florida that is a debt collector (son lives in florida). I had requested validation from both, only rec’d from the the florida group (i’m not certain – these two groups could be related). I also just rec’d a “litigation notification: intent to sue” letter stating they’re preparing legal action but would rather resolve the matter and willing to work out an arrangement and avoid legal proceedings. asking for a call within 7 business days. if ignore, leaves them no choice but to assert their clients rights. The debt is $3900. They provided the affidavit of sale and certification of debt between the OC and CACH giving them authority to “settle, adjust, compromise and satisfy” the debt sold and transferred to CACH. I’m hoping to avoid a judgement against him- he’s unstable, can’t hold a job, doesn’t have any money and is awaiting court ordered child support he is somehow going to have to pay, in addition to a “legal” history. he may have some money coming in from an IRS refund that i was thinking could be offered (maybe $800 or so). Do you have any advice for me, especially since i seemed to have blown it by asking, and receiving, the debt validation? Thank you for any/all insight or advice you may have to offer.

I’m sorry to hear that your son is going through this. I wish you guys would have found my site earlier too.

I used to work for CACH, so I’m very familiar with their inner workings. The law group in Florida is probably one of the Attorney franchises.

The way they are structured is CACH buys the debt and places the accounts with their franchises to collect on. They have a lot of franchises all over the country.

Anyway, they generally place the accounts with any franchise in the beginning stages, but if they can’t collect via a phone call and they feel litigation is what’s necessary, they will forward the account to a franchise that is local to the consumer.

You definitely want to take this situation seriously, as the FDCPA doesn’t permit them to make threats that they don’t intend to take action on.

I would say that $800 is probably a little low at this stage. $1,200 may be possible, but they’ll probably try for more considering the circumstance.

If I were in your shoes, I would call them and offer the $800 and go from there.

If you need to follow up with me or if you need any pointers, please feel free to call me. Have a great day!

I dunno, this advice seems good and bad. I came here because I have bad credit and am worried about doing the debt validation process for the reasons you’ve outlined, but *talking* to reporting agencies? That doesn’t make sense to me for a couple of reasons:

1) Whether the “general info” on the internet is right or not, most sites do recommend getting something in writing. While I agree it may seem more agreeable to talk with a person and negotiate on your terms vs. just sending a “mean” letter, what’s to stop them from saying you agreed to something you didn’t over the phone? There’s especially no reason for them to remove something from reporting without a deal in writing, I’d think.

2) You say you’ve worked on both sides and I can appreciate that, but I’m not sure if you’ve talked to credit reporting agencies recently. I’ve never leaked my “desperation” to get these items off my account, but the companies I’ve talked with over the phone have been pretty hard-line: I’m paying the debt, all of it, even if I have to do it in installments, according to them. I’ve been nice on the phone and willing to work with them, even been transferred to others within each respective company; they’ve also been nice, but it’s basically been told to me that it’s no dice to negotiate; I’m paying it all or they’re not accepting.

It may be anecdotal, but the evidence using the debt validation method, HIPAA letters, et cetera, seems to have worked for many on credit reporting forums, and all I have here is your say that because you work in this industry that they are wrong and you are right. Again, their evidence may be anecdotal, but at least I have seen screencaps of credit score changes and their very detailed information leads me to believe it’s not simply contrived; why lie about something like that, anyway? Some of them have been sued, some have won some have lost; but if the odds are so stacked against them using DV and the like, why do so many see improvement using offensive methods? I just don’t feel that it’s good to sit back and try to hide, regardless of whether the debt is valid; that’s why we have the problems in the first place.

1) I’m in total agreement with you. I explain in the article to get your agreements in writing. I guess you missed that part. Here it is: “If you are interested in resolving the delinquencies on your credit report, it is very wise to resolve your “valid” accounts by engaging your debt collector verbally to work out an affordable arrangement and to get everything in writing prior to making payment.”

2) I talk to collection agencies with my clients almost daily. And you’re right, most of them are nice and professional. However, their job is to collect as much as possible from you. If you immediately agree to their terms when they’re attempting to do so, you are setting yourself up for the outcome that you have described. Dealing with debt collectors is 99% psychology. You have to negotiate with them. You have to create a degree of uncertainty on their end. You have to go back and forth. If you don’t, your result will occur.

3) You’re right to say that these letters can work. The statistics provided by the FTC and the CFPB clearly indicate such. I’ve never claimed otherwise. However, even when they do work, it doesn’t mean that the account won’t pop back up again in the future. When accounts go into collections, they usually rotate to different collection agencies about every six months or so. When that rotation occurs, you are subjected to the account being reported again. The letters do not offer any guarantee of permanent resolution.

The premise of my opinions in this article is: what’s the point? Why potentially put yourself in harms way and inhibit the cooperation that you may receive when the best possible outcome is a result that may be temporary at best? In my opinion, for people who desire resolution, it’s not even close to being worth the risk as it does not align with their future goals.

It’s not about hiding, it’s about being financially prepared. Would you go to the grocery store and fill up a cart full of food and then proceed to the check out knowing that you don’t have the money to pay for it? It’s the same principle…

Please feel free to follow up with any additional questions or comments, Michael. Have a great day!

I have a company that just started calling me about a cash loan. I’m not sure this is even mine. I already have bad credit that is slowly improving. They are trying to say that they are serving papers to arrest me. I’ve looked online for the company which has a website but no location information. I’ve never received any information about this debt. I they have called my father in law and wife, but not me. When I look online, every comment on this company is that they use this tactic for debt collection. They want 3600 but will settle for 650? No information on when the debt was incurred or anything like that. Won’t give out their address either.

This collection agency is majorly breaking the law. They can’t threaten arrest. Just so you know, you can’t be arrested for not paying your bills. It’s a civil issue, not a criminal one.

If I were you, I would do a Whois search on their web domain in an attempt to locate their location information. I would then turn them in to both your state attorney general and the attorney general for the state they operate out of. You may also want to file complaints with the CFPB and the FTC as well. You also may want to call an FDCPA attorney to gain a legal opinion on what recourse you could take. Most of them offer free consultations.

This is more than likely a small, fly-by-night collection agency, as any legitimate collection agency would never use tactics like the ones you describe. They’re major offenses that could shut their doors permanently.

Beyond that, if you’re seeking more information about the debt itself, I would send a debt validation letter in this scenario.

About to send VOD when I read this. Not sure what to do now. My case: left a cell provider to another and ported my #. Called the previous provider and was told everything looked fine in Jan. Then a bill appeared on my credit card Feb. thought it was the leftover. Then another bill appeared on March credit card statement. So called the credit card to refuse the charge. The credit card credited both months back. Suddenly the previous cell provider sent me a mail, charging both months with interest, threatening sending me to collector etc. It did. I got a called from a collector, telling me one month is for last month charge, and another is for porting the number myself. I was offered 25% discount but he wouldn’t give me anything in writing before receiving my payment via a card. I don’t feel comfortable doing it.

My questions:
I don’t think 2nd month pay is valid. Should I do a vod letter?
If I do a vod, can the collector charge me interest, while waiting for reply?
The total amount is small130-170. Is it likely the collector would sue me?
I did get a written letter from the collection agent after receiving the call. What’s your advice on solving the issue? Thanks.

I apologize for the delayed response. If I were in shoes, I would call the original cell phone provider and ask them about the charges pertaining to the second month. The agent that answers the phone may say that you need to call the collection agency. Explain that you need information pertaining to the balance and that you would like to talk to a manager in their billing department.

From what you have described, the agent that you cancelled with may not have coded your cancellation correctly.

If the manager finds the charges for the second month to be erroneous, ask them to provide you a new bill with the corrected amount via fax or email and to notify the collection agency of the changes immediately.

After you have concluded that phone call, call the collection agency and explain the situation and ask to speak to a manager there as well. When speaking with the manager, explain the situation and ask them if their client has notified them of the changes to your balance. If not, educate them about the amount that you truly owe and ask them if they can reach out to their client to confirm the situation.

If you have received a corrected statement from the original creditor by this time and the agency hasn’t been notified, ask the manager for his/her fax or email address so you may provide them a copy of it. Then explain that you will pay the valid portion of the bill immediately and to enter the remaining balance into dispute on their end. Make sure to ask them how long they have had the account and when the account is scheduled to be reported to your credit report. I would also ask the manager to call the original creditor to expedite the process if they haven’t been notified already.

Prior to concluding this conversation with them, if they haven’t yet been notified of the changes, make sure to confirm whether or not they will report the account to your credit report while they’re investigating the disputed portion of the balance and how much time you have before that may take place so you’re familiar with your timeline.

To be on the safe side, I would then follow that conversation up with a letter sent certified mail detailing your dispute. In the letter, explain that you have reached out to the original creditor and they have corrected the outstanding balance and the remaining amount is an overage that you are not responsible for.

I would then call the collection agency back within a couple days of them receiving the letter to make sure everything has been taken care of. If it has, ask the agency for a zero balance letter for your records.

Please feel free to reply with any questions. Phone calls like this can be annoying, so be as professional as possible and don’t take no for an answer and this situation should be resolved quickly. Good luck!

I am a 65 year old woman in CA. My only source of income is Social Security Disability. My previous work history has included collections, so I am familiar with the FDCPA.

I do have student loan debt, which is on income based repayment plan. Because my income is so low, my payment is zero. So I’m not concerned about that right now.

I know that even if an original creditor, or a debt collector, were to somehow get a judgment against me, they would never collect because they cannot take my Social Security (only the government can do that). And, I am not in a position to pay anyone anything now or in the future.

My current credit report contains several collection items that are past the CA statute of limitations. Would you recommend sending debt validation letters, saying that I saw the item on my credit report? Should I mention that I am judgment proof?

For items not past the statute of limitations, how do I get the items off my report when I’m unable to pay anything?

I’m unsure exactly how to proceed. I am on waiting lists for senior income-based apartments and have already been turned down once for having over 7 collection items on my credit report.

A debt validation letter will not accomplish your goal if the collection agencies have had the accounts for more than 30-35 days. When a collection agency has had the account beyond that amount of time, they’re only required to mark the account as disputed.

If I were in your shoes and felt the collection items on my credit report were inaccurate, I would handle the dispute process through the credit bureaus. I would go to annualcreditreport.com and pull all three of my credit reports and dispute them from there. In a little over 30 days you should receive a letter from Trans Union, Equifax and Experian detailing the outcome of your disputes.

Please feel free to reply with any questions. Good luck and take care.

I was advised to write a debt validation letter so I began researching such letter before stumbling upon this site. My situation involves a collection agency that I just found out about last year has a collection from an apartment complex who says I owe $489 for “25% carpet replacement”. Now, I have absolutely NO knowledge of this until now and I was told by an attorney to review the lease to see if there is a clause regarding the carpet replacement. This debt to me is invalid because I had no knowledge of it and we did nothing in that apartment for them to replace the carpet. We only lived in the apartment for a year. However, they have updated the collection to reflect May 2014 which negatively impact my score. Will a debt validation work in this case?

If I were in your shoes, I would reach out to the apartment complex to inquire on the age of the carpet. Your first question for them is what was wrong with the carpet. If you agree with their assertions, you will want to find out how much of the carpet was replaced. Exact square footage is what you’re looking for.

Your next question will be regarding the age of the carpet. In situations like this carpet has a 7-year life expectancy, so you want to inquire about what date the carpet was originally installed and then coincide that date with the date that you moved out.

For example: the carpet was installed on 1/1/2008 and you moved out on 1/1/2013. In this situation the carpet was 5 years old. So your next step is to divide the replacement cost by 7 and to multiply that result by 2.

To continue the example, let’s say the replacement cost was $700. So 7 divided by $700 is $100. And the 2 years remaining life expectancy would be $200. This is the amount that they can legally charge you for.

In respect to the collection being updated, which data point did they update? If it was the date last reported, this is standard. If it was the date of original service or activity, this is not. If they have reported the date of original service or activity with a 5/2014 designation, the collection agency is violating the FCRA and they could be held liable for $1,000 in damages.

In a situation like this, I highly recommend that you pull a full credit report. When you receive credit reports from Credit Karma or FreeCreditReport.com, the reports generally don’t show these data points. You should go to annualcreditreport.com and pull your credit report from there to become familiar with these data points.

I have two accounts appearing on my CRA. One does not belong to me, the other is reporting inaccurate information.

The one that does not belong to me is for a property management company. The property management company is on the west coast and I live on the east coast. I’ve never done business with this company. I submitted a dispute letter to the credit bureau. The debt came back verified. I submitted a request for “method of verification”. I received a response from the credit bureau with the contact information of the creditor. What is my next step? The original amount due is $2500.00, the new amount due is $3500. The date of first delinquency was 3/2014. Is this situation what is my next step? I have not sent a verification of debt to the collection agency. Per all the web sites, that was to be my next step.

The second account is still with the original creditor. The amount due is $13,000. This account is schedule to age off my consumer credit report in March 2015 and per my state statue of limitations this account is no longer collectible. The creditor reaged the account by changing the date of the last payment to 4/2011, which is not correct. I disputed the validity with the credit bureaus but was verified as being correct. Do I let this age off my account? What do you suggest?

I apologize for the delayed response. I’ve been really short on time recently.

In respect to the first account, based off of your explanation, you don’t feel this account is “valid”. I would absolutely send a debt validation letter in this scenario. Just make sure that you’re 100% confident that this debt is invalid prior to doing so. If you’re not 100% sure, I would personally do some fact finding first by calling the original creditor to probe them for more information.

In regards to the second account, if you’re not in a rush to use your credit, you may want to wait for the account to age off your credit report organically. Based off of your information, it appears that will occur in about 9 months. However, you may be able to speed this process up slightly by disputing the account directly with the credit bureaus when the account has 6 months or less of credit reporting life remaining.

The credit bureaus, quite frequently, won’t bother with validating accounts that have less than 6 months of reporting time remaining. I would imagine that they feel that it just isn’t worth the effort with such little reporting time left.

Also, you may have recourse against this creditor if you would like to pursue that angle. Re-aging the date of last activity is an illegal practice. You may want to reach out to an attorney that specializes in the FCRA for a free consult.

Good luck to you, Confused. I hope that everything works out for you in the manner that you desire. Take care.

I was just in the process of typing up my debt validation letter (I found a great template online and was filling it in!) Decided to look at a few more websites and found yours. After reading what you posted, it definitely made sense in my situation to not send the letter. I know the debt is valid I just don’t have the $$ to pay it right not. I’m not trying to clean up my credit and I’m not trying to make any major purchase. However, I have been served in the past with a judgement so I know better than to just ignore the collections letters.

I wouldn’t want to speed up the process of receiving another judgment by sending a debt validation letter and have them find all the documents showing that the debt is valid. That will just make them go to the next step which I don’t want!
I will take your advice and determine what I can pay and contact them via phone to make an offer….after I read your article on that scenario! The worst they can say is no, but would they really turn down any payment for no payment at all??

I would carefully consider entering into a payment plan on an older collection account. The reason why is you will more than likely renew the statute of limitations when making your first payment.

In most circumstances, you are better off saving up some funds to settle the account in a lump sum. By doing so, you eliminate the risk of restarting your clock and you shorten your timeframe to achieve satisfaction.

If making things copacetic is more important to you, I would attempt to negotiate a payment plan that is affordable under any circumstance. That way the risk of renewing the statute of limitations is moot. Furthermore, if the payments that you are making are small, the collection agency will be more likely to find a lump-sum offer to settle more attractive in case you run into some money to offer settlement in the future.

I had an account with Bally’s before it was bought over by LA Fitness. That account was in good standing till the switch over. I made sure nothing was owned to Bally and LA Fitness during the switch over and I thought that was the end of the matter. Fast forward four years later I get a collection report on my Transunion credit report from Asset Recovery Services stating that Bally’s was the original creditor. I disputed the matter by calling both Fitness establishment and LA Fitness confirmed I owed nothing. Bally’s claimed that I owed them. Further investigation revealed that the account Bally claims that is mine is different from the one I actually had with them. I told them that it was a fraudulent account and that I would need a copy of the contract. They stated that they will not be able to help or send me anything as they had forwarded it to a collections and that my business was now with the collection agency. They basically washed their hands clean of the whole deal. This was also stemming around the time they had they big fraud malpractice served on them.

Long story short, they sold the account to a collection agency who in turn sold it to Asset Recovery Solutions whom now reported it on my history. I disputed the account both with ARS and the credit bureau. The Credit bureau deleted the account after their investigations while I heard nothing from ARS. A few days later after the deletion, ARS now sells the account to FBCS inc who in turn now sent me a notice. I sent a validation request to FBCS and they replied that they are trying to get the requested documents from their client, ARS, while my account remains in hold. Isn’t this a case of aging or malpractice or what have you? What is my next step from here? I do not think, or do I have to dispute a credit bureau deleted fraudulent account to an agency who is unable to provide validation from a client company that was also unable to provide or validate so said documents.

For about 10 years now, the credit bureaus have had a policy to delete collection accounts that are attributed to gym memberships when they’re disputed.

So if this agency reports the account again, do as you did and dispute the account again directly with the credit bureaus.

As far as the new agency is concerned, if I were in your shoes, I would call ARS and explain to them that they sold an account that they should have known that was in dispute and that was never validated. I would mention to them that you feel that they should not be doing this and that if they fail to warranty the account (buy the account back), that you will be forced to file a complaint with the CFPB (Consumer Financial Protection Bureau) and to seek the advice of a FDCPA attorney.

I would also request for them to issue you a letter explaining that they bought the account back and that they promise to never sell or report the account again unless they can verify its accuracy.

I would then call the new collection agency to verify that the account has been bought back and request for them to issue you a letter explaining that they are no longer handling the account and that they have not reported any information to the credit bureaus.

I too was about to send out a verification letter on a debit that has been re-aged on my credit report.

The original debit was a CC with a major bank, it was opened in 2005, the last payment was made in 01/2008, the debit charged off 05/2008 and was sold in 2010. The amount charged off is about $8500, the bank offered me a settlement of about $2000 just before they sold the debit but I could not pay. The company that bought it made some collection attempts and then gave up and sold the debit themselves to Midland Credit in 12/2011. Which is the date noted as opened on my credit report.

Midland credit updates the collection account every month with an increased balance due to interest they say in accruing. The debit is now listed as being about $13000. The debit is too old to sue on and Midland credit acknowledges this in letters that they have sent to me in attempts to collect.

Basically I want this off my credit and I do not want to re-age the debit again by making a payment on this. Every time Midland updates the delinquent account it hammers my credit score.

Since the original date or default is 01/2008 this should be dropping from my report in about 7 months correct? Should I wait until then to send a letter about the dates? Should I do nothing? I fear that they are not going to want to settle for a reasonable amount and that they are not going to agree to a pay and delete. I currently have a cease and desist letter in to Midland so that they do not call constantly.

Based off of what you explained, this account should already be off of your credit report as of January of this year. Even though the FCRA permits accounts to be reported for 7 years and 6 months, the common practice for credit bureaus is to remove the delinquent tradeline after 7 years.

I would immediately dispute the account with the credit bureaus. In about 30 days you should receive a letter, from each credit bureau that you disputed with, advising you of the outcome.

I would also send a letter to Midland explaining that they are reporting an inaccurate date of last activity that is re-aging the account. Explain in your letter, that if they fail to remove the account from your credit report immediately, that you will be forced to seek the advice of an attorney who specializes in the FCRA.

These two actions should do the trick.

Also, if you did want to settle or make payments on this account, not that I think you should, it does not renew the reporting period. Please see this opinion letter from the FTC that explains this.

Michael, if you’re still reading this, you may want to dispute the account next month directly through the credit bureaus. They often delete accounts that have less than 6 months of reporting time remaining when they’re disputed.

Thank you for posting this information. Like many others, I found your site while researching the subject of debt validation. While I’ve read other forums that suggest always requesting validation, I’m gathering that in my case it does no good to bother.

Briefly, my scenario is this. In 2003 I was making close to 90K a year. I began a total home remodel. I used revolving accounts to purchase all supplies with the intent to refi the house, pay off revolving accounts and roll it all into one mortgage. During the remodel I suffered a major illness that eventually led to full disability. Was able to use savings to keep up with bills until 2005 but eventually had to stop paying to meet essential living expenses. I escaped foreclosure by finding an investor who bought the property as-is (75% complete), essentially walking away with only a few thousand and no foreclosure on my report, but still a string of revolving credit account delinquencies (roughly totaling 60K).

Had no income for 2 years then finally got Social Security Disability, which has been my only income since 2008. Was never sued by any of them (many of them I was honest with and told them that I had no assets and only SSDI as income). Eventually the SOL passed (Utah) and the accounts have aged off my report. Now, the secondary collectors are still buying them and contacting me, which I understand is their right. But I gather that the best thing to do now is just not respond? I’m afraid if I send a cease and desist that it will re-set the clock by acknowledging the debt, even though I have all files showing DOFD’s and a couple of subsequent annual credit reports confirming DOFD’s as all from 2005. I am re-establishing credit and would eventually like to purchase a small unit strictly to hedge against inflation as living expense increases are already starting to exceed the annual SSDI increases.

Note: When this all happened, I did not have the means to file BK. A few years ago I talked briefly with a professional about the possibility of filing BK and was told that since the debts were outside SOL and soon to age off my report, that BK would only hurt me more than help me. I know it’s not “morally” right never to pay, but I know that if I had filed BK these debts would have been discharged anyway. I do not have the means to “settle”. I want to move on. Do you still recommend settling with these debt buyers anyway? I understand that if I do buy a property they may see the mortgage whenever they hard pull my credit (as some do), but at that point any of these old debts will still be outside SOL anyway.

I’m sorry about what happened to you. You got great advice about not filing bankruptcy, as it would be totally unnecessary if your accounts have exceeded the statute of limitations.

If I were in your shoes, I would send these new collection agencies cease and desist letters. Just make the letter short and sweet.

Include your name and account number and just say that you do not wish to be contacted in any way. I wouldn’t say anything else beyond that you do not wish to be contacted. To be on the safe side, I wouldn’t sign the letter. Again, short and sweet is best in this type of situation. You may want to consult an attorney prior to doing so to be on the safe side. Your local Legal Aid Society may be able to assist you.

I created a chart in the article that links to each state’s specific law regarding the specific requirements for renewing the statute of limitations through acknowledgement. Feel free to check it out for a link to Utah’s statute.

I hope things are getting better for you and remain that way. Please feel free to follow up as needed. Best of luck to you. Take care.

I am receiving harassing telephone calls from what I believe is a collection agency, but they will not disclose to me what the call is about, they told me the company they were calling from, I requested that they cease and desist calling, the representative responded that the request must be in writing, should I contact the company and request that they cease and desist calling my telephone, also the representative claimed that they spoke to me 7 months ago but this is a lie, or should I contact the company to get more information, I agree with everyone else that talking to these people is stressful. Thank you.

I need more information about the debt before I can feel comfortable providing you with some direction. Cease and desist letters can be dangerous to send if the account is still within the statute of limitations.

If you’re familiar with the company’s name, Google them and call them. When calling them, ask for a supervisor, as they should be more reasonable and disclose the nature of their involvement.

If you need additional direction, please feel free to reply. Have a great day!

I was getting ready to send a letter to the collection agency (was searching for a template) when I found your site.

Here’s my situation:

In 2012, I was on vacation in London and got sick. I had to go to their ER and ended up having to have minor surgery so that I could fly back to the US. I was there for two days and everyone kept telling me not to worry, that in the UK, it was free. However, I’m sure I signed some kind of consent for treatment, so that would be a contract, correct? I didn’t have a choice, they wouldn’t let me fly home.

Fast forward 6 months and I start getting bills for $6k for the surgery. I requested copies of my charts so I could try to get either my own health insurance to pay or travel insurance. Travel insurance wouldn’t pay unless my health insurance denied coverage. My health insurance refused to do that, stating that if I paid in full, they MAY reimburse me. I didn’t have $6k (they gave me 30 days).

This has been sent to a collection agency in the US and I just got another letter stating a law firm has taken it over from the collection agency. I’m worried about being sued since they now say I owe $7200. From reading, I’m pretty “collectable”, I have a job, we have a mortgage, and just got a new car in December. I don’t have $7k, but I could work on coming up with a portion to settle with. Should I just wait to see if they try to sue or should I try to negotiate settlement when I have the money (3-4 months, maybe 50%)? I don’t like owing anyone money, so this is really bothering me.

It sounds like you’re getting the runaround with the insurance. Please keep in mind that the way health insurance works in these types of situations is that the insurance company is responsible to you, not to the medical provider or to the collection agency or attorney.

If I were in your shoes, I would call your insurance company and go up the ladder to get actionable direction from them about what exact steps to take in order for them to cover this. Ask them why reimbursement is necessary, if indeed it is.

In respect to settling, you’re better off trying to work out a settlement before they sue. Once they sue, they generally aren’t as negotiable as they would have been previously.

However, sometimes collection attorneys are just glorified collection agencies, so a lawsuit may not be imminent. If the attorney is located in a different state than you and isn’t licensed to practice law in your state, then that may be the case.

Either way, it sounds like this is something that you may want to address sooner rather than later. Please feel free to call me if you need any assistance. Take care.

Thanks for the quick response Jared. The travel insurance had a 90 limit to claims (I hadn’t even received a bill by that time) and my health insurance company had a 365 day limit (which was up in Aug 2013). I called and went up the chain with them and because I’m not technically covered outside of the US, the only way they pay is by reimbursement (which they couldn’t guarantee would happen).

They sent it to a collection agency in CA (I’m in MO) and after several months, the original debtor sent another bill. Now the collection agency has sent it to a lawyer (and on their letterhead says they are licensed in CA and OH), but the first collection agency is still calling me.

I think I’m going to try to save up the money to make a settlement offer. If the original debt is £3500 (about $5800 USD), what would be a good percentage to try to settle with?

I had one more question… is it possible to have 3 different companies calling about the same debt? I have the original US one calling, a letter from the lawyers office, and now someone else calling and leaving taped messages about suing me (with no company information or anything else given) for the same debt. Even if I could pay them right this minute, I don’t even know who’s actually the one to pay! It all just seems fishy to me.

It’s possible, but highly illegal. Only one collection entity is allowed to collect on the account at a time.

What ever you do, do not delete those messages. Those messages are illegal too. Like big time!

I would call an FDCPA defense attorney, Jennifer. Before calling them, prepare those recordings so you can play them for the lawyer.

Try to find someone locally if you can. Just google “FDCPA attorney with your city or state”. Most of them offer free consultations, so if you encounter one that doesn’t, just keep looking for one until you find one that does.

Thanks so much for writing this. It was really, really helpful, really clearly written and understandable. I’m pretty smart but the legalese just boggles.

I was sued for a “legitimate” debt but since I can’t settle it (and I’m loathe to give money to collections companies knowing they only paid a tiny fraction for it) I’m going to fight it in court.

I submitted an answer back in Jan, 11 when it was due, was advised it was possible they might not pursue. I heard nothing and nothing until in October 2013 I was sent a notice that they were moving to vacate the dismissal without prejudice from April 2013 (that I wasn’t notified of). The court agreed to dismiss and now I have a court date in August.

From the research I’ve been doing it’s been recommended that I should now send them a letter demanding standing, chain of custody, etc., etc. I found what looks like a thorough and clear letter that I’ve altered for my needs.

My question is do I send it? I’m already being sued so they need to prove up and down what and why and why they get to collect, per se, correct? Or do I wait and do that in court?

This guy is not only a genius, but he should be given the Nobel Peace Prize for sharing this information rather than holding it towards his chest to benefit himself. If I were you, I would read this document 10 times over, as it will provide you with so much amazing information that you will be giddy.

Second, I would Google the following: “(name of the debt buyer that is suing you) affidavit defense”. By doing so, you may locate some other cases where the debt buyer’s affidavit has been successfully challenged.

Third, Google: “(your location) legal aid society”. Then call them and setup an appointment so you may gain the actual legal advice that you’re looking for. Just research the above first, so you can assist the attorney with this amazing information.

I wish you the best of luck. Please feel free to reply with any questions. Take care.

Just reread this page and noticed that I missed what might be a valuable point in my letter: I’m being sued by a (notorious) law firm from San Jose (can I say that it is Hunt & Henriques?). I know you can’t give me legal advice but do you have any initial thoughts on the difference between “collection agencies” and “law firms” that sue?

I have contacted my local (LA, CA) legal assistance but it seems they deal more with bankruptcy than situations like mine. Confusing. But I’m going to go down and sit in the offices and see if someone can give me some guidance.

Fairly new debt, I deal with all of the others unfortunately no had enough time to negotiate with this one, I was just about to write a validation letter and came across your article.

Debt is 2189 I want to settle, realistically how much do you think they will go for?

I don’t have the cash I would have to pay with cc but my card don’t have interest for another year so I can switch to cc and move things around to make it happen. however the total amount is almost impossible.

Nice article thanks! I received a letter from a collection agency dated May 1 showing a debt owed or $310 plus interest of $52.70 for a total of $362.70.

The Creditor name they indicated were only initials of some kind. The letter states “If you notify this office in writing within 30 days from receiving this notice that you dispute the validity of this debt or any portion thereof, this office will obtain verification of the debt or obtain a copy of a Judgement and mail you a copy of such Judgement or Verification.”

So I sent them a written request of validity letter on May 6 requesting exactly what they were offering should I do so. They did call me on May 20 but it was a 877 number which I never answer. I Googled that number and it was the Collection Agency.

So the other day on June 7 I got a message from Experian that my credit file had changed. So I looked it up and sure enough the Collection Agency dinged my report!

My question is, can they ding my credit without mailing me the verification first? If not, what do you think I can do about it?

Hi Jared,
When a CA such as Midland files a lawsuit, isn’t it available to view on the MD court case website immediately? Meaning, they can’t file with the courthouse 2 months ago and today it is posted online. Is this correct? I am asking because the SOL was May 27th, 2011. So I don’t see it on the court website as being filed yet and assumed the date now filed will be after that date, or > todays date.

I’m not sure. This is a situation where you don’t want to make assumptions. I would reach out to your local Legal Aid Society and ask them about your specifics.

You may also want to read this as well. It’s without doubt, the most comprehensive piece of information I have ever read when it comes to defending lawsuits from debt buyers.

If you are indeed being sued, please update this thread with your situation so others can learn from your experience. Good luck and please feel free to reach out to me should you feel the need. I wish you the best.

Hi Jared,
What would you advise about “zombie debts”? i was considering sending debt validation letter to two of the collection agencies on my credit report. The reason being that I know the debt they are trying to collect is from 2008 and 2010 but they are stating that the account became delinquent in 2012 thus making this collection stay on my credit report until 2019. My understanding is that the debt should be past the statute of limitations now and should fall off my credit report in 2015 & 2017. What would you recommend in this case? Another option I was considering is disputing the dates with the credit reporting agencies and not contacting the collection agencies.

If the accounts have expired from the statute of limitations and you don’t intend on negotiating them, a debt validation letter may provide you some value without exposing you to the risks that I outline in the article.

However, as I mentioned in the article, if the agencies that are reporting the debts to your credit report have had them for longer than 30-35 days, they’re only required to mark the account as disputed, rather than remove them.

Whereas, if you dispute with the credit bureaus, they must delete the accounts if they’re not validated in 30 days.

I would say that you may find the most beneficial approach to be both.

Thank you for posting this article and extensive involvement on this topic. I greatly appreciate your time.

I’m posting a response, since I am a crossroads after reading this article. I few days ago I received a notice stating the current collections agency has hired a separate collections agency to collect the debt. I have 30 days to dispute the validity of the debt. The debt in question is roughly 8 years old since the original debtor charged off the debt. This will well over the statute of limitations here in California.

I was planning on sending a Debt Validation Letter to handle this situation. But after reading this article, it seems like I should send a cease and desist letter, and be done with it. I am currently rebuilding my credit, and know this old debt is not reporting on any of my credit reports. What route would you take?

My pleasure. I would personally send a cease and desist letter in your situation. I would make the letter to the point. Include your name and account number and just say that you no longer wish to be contacted in any way. I wouldn’t sign it.

Hi Jared,
Wonderful article!!! I almost had the same issue as Rob does. However, I have two questions for you, if you would be so kind as to guide me on how should I go about resolving them. I apologize in advance for the long questions.

(1) On 11/26/2013 I sent MCM a letter requesting validation of a T-mobile account that they had been invoicing me about and also appears on my credit report but with a different date. The letter was received on 12-02-13.

-On 12-05-13: They mailed me a collection bill
-On 12-17-13: They mailed me a sheet with T-Mobile’s name and the information of the amount of money owed with a “monthly recurring charge of $72+” added to it
-On 01-08-14: They sent me an offer for a one time payment to consider my account paid in full.

Can they send me a bill prior to sending me the verification of a debt? Can they send another one within 30 days of sending the “verification”? At this point this account is also over the statue period but I am not sure what I should do at this point. I had T-mobile before, I am sure I paid the account in full but I can’t find record of my last payment to verify it since it was in 2010.

(2) On 10/04/2012 I sent a letter to request validation on an account (from May 2010) that was reporting in my credit report to the collection agency listed on there. I sent it via certified mail. I never received anything from them and I got busy with a new job and so forth. On 11/25/13, I sent the credit agency a request to have this removed from my report since I never received a response from CA. However, on 12/19/13 the CA sent me a letter stating that their records show that I was previously provided with verification of the debt.

Can I ask for proof of this? Are they obligated to send it via certified mail with return receipt? At this point, the statue of limitation has expired in TX but I don’t want this to continue showing on my credit report. Can I ask the CRA to remove it, if there isn’t proof that I received the verification of this debt? Or can I ask the CA to consider removing this from my CR?

Thank you very much. I apologize for the delayed response, there is never enough time in the day.

I would reach out to an attorney regarding the MCM questions, just to be sure that you’re getting accurate information. I’ll take a stab at them though, but I wouldn’t rely on my information. It’s just food for thought.

In respect to whether or not they can send you a bill after you have requested validation prior to sending you validation, there are 3 possibilities here:

1) The bill could possibly be perceived as validation since the requirement to meet the definition of validation is so low.

Wikipedia has an excellent write up on validation that will help explain this. In their except for the definition of debt validation it states: ” The FDCPA does not define what constitutes proper debt validation, and the issue has not been fully resolved by the courts. In the leading case of Chaudhry v. Gallerizzo, the Fourth Circuit Court of Appeals adopted a relatively low standard: “Verification of a debt involves nothing more than the debt collector confirming in writing that the amount being demanded is what the creditor is claiming is owed; the debt collector is not required to keep detailed files of the alleged debt.”[6] The Court further stated that a request for validation of the debt is primarily intended to eliminate such problems as collectors contacting the wrong person or attempting to collect debts which have already been paid.[6] In 2006, the Ninth Circuit Court of Appeals followed and adopted what they described as the “reasonable standard” articulated in Chaudhry.[7]
Consumer advocates have criticized the Chaudhry and Clark cases as setting too low a legal standard for validation and allowing debt collectors to justify providing little information in response to a dispute.[8] In addition, some courts (such as the Court of Appeals of Indiana[9]) have taken a stricter stance on debt validation than the Chuadhry Court, though the precedential value of such cases is uncertain.”

Here is a link to the page so you can further explore this information.

2) If the bill they sent isn’t deemed to be proper validation, they may be able to claim the bona fide error defense. I say this because the bill was sent in close proximity to the receipt of your dispute. And because they sent you “proper validation” shortly thereafter.

3) They are in violation and you may have something to pursue.

In respect to sending you another letter within 30 days of mailing the validation, I’m not familiar with any law that prevents them from doing so. From my knowledge, the only time that this could be relevant is when they send a settlement offer previous to the 30-day validation period expiring. When a collection agency or junk debt buyer sends an offer of settlement previous to the expiration of the 30-day validation period, it is considered overshadowing.

In respect to what to do, if I were in shoes, I would call T-mobile and speak with their billing department and ask them about your previous payments and why you still have an outstanding amount. They should be able to produce proof of your last payment to them, and if not, at least a receipt.

In regard to your other situation, Texas is the only state that I’m familiar with that poses a time limit on validation requests to junk debt buyers and collection agencies. Here is a link to the Texas State Law. Section 392.202 is what you’re looking for.

This section explains that the collection agency must make a written record of your dispute and that they must notify you of the result of their investigation within 30 days. I don’t see where it states that they must mail this information to you by certified mail. However, I would imagine, since they’re required to keep a written record, that they should be able to provide you a copy of what they claim they sent to you previously if you request it.

I hope this information helps you. Please feel free to reply as necessary. Take care.

Thank you so much for the informative article. I do have some questions that were not addressed in any of the previous thread.

I recently received a letter from a debt collector, stating that I owe a sub 500 amount to a insurance company. I was involved in a minor car accident with a rental car 1 year ago and I did not file a claim with the rental car company due to no damage to my vehicle. Now the insurance company has come to me through the debt collector as they could not find a claim filed with the rental car company, and hence, my coverage during the rental cannot take care of that.

I intended to file a DV prior to reading your article, but I no longer think it is necessary as I do not deny the fact that the accident happened and I can affort the whole amount.

Question becomes
1. I want to verify the amount that I owe – whether the insurance company actually paid this much, and whether this is the amount that I am responsible for. (i.e. some states have no-fault insurance policy) Is there any way to do so without filing a DV?
2. How much can this affect my credit history if it was not taken care of carefully? “Carefully” means whether I resolve the debt, and how fast I resolve the debt.
3. Depend on answer to question #2, how much room of negotiation would I have in this case?

1) Absolutely. Check into your no-fault state laws and call the rental company and ask them to itemize the charges and any payments they have received. They may give you some resistance, if they do just go up the ladder until you encounter someone who will take the time to answer your questions.

2) If it’s already on your credit report, the quicker you take care of it the better. Most creditors look back 24 months. Which means, for most creditors, if the collection account has been addressed for more than 24 months it won’t fall into their “window of time” when they’re considering lending to you.

3) When you settle an account, it reports differently than when you pay it in full. On a small balance like this, you may find additional value by paying it off in full to minimize the damage.

Great site and article. You may be in danger of giving debt collection a good name!

To the point, I also considered the DV option, but rejected it primarily because it was valid debt and, ethical questions aside, I just couldn’t see any benefit to it.

The debt collection agency that I would have sent the DV to has now served me with a summons to appear in a civil court to answer a “Complaint Under Simplified Civil Procedure”. This complaint merely states the creditors, dates of service, principal and interest, and asserts the plaintiffs entitlement to recover said debt.

I don’t dispute any of it. I simply can not pay it. By any legal definition, I’m indigent (not destitute), and they couldn’t possibly recover any of it.

I guess my first question then is really one of collection-agency tactics: Why would a collection agency choose this route when the debt (7K) is within the jurisdiction of a small claims court? Again, using the “you can’t squeeze blood from a turnip” defense, the end result will be the same, but what advantage is this to them?

My second question regards a statement in the Answer to the complaint. It states that I can either challenge the validity of the debt, or….

” the injunctive relief requested by the Plaintiff(s) should not be allowed for the following reasons: ”

What injunctive relief? As I said, the complaint merely states their entitlement to recovery of the debt, which, being a contractual agreement anyway (sort of–it was a series of medical treatments for a condition that basically rendered me unable to even remember it, but I’m not disputing the fact that they should be paid for administering it), hardly needs reasserting in court.

I know you’re not a lawyer, but do I need one? I can’t afford one, any more than I can pay this debt. If I just show up in court at the appointed time and state my case (indigence, penury,etc.) will I at least avoid a default judgement?

Please don’t be embarrassed. It happens to all of us. Things don’t always work out the way we hope.

Isn’t the delinquency being reported to your credit report via Citibank? It should be. And if it is, there is very little to protect at this point.

You should always consider bankruptcy in these types of situations. You should also consider settling as well.

If I were in your situation, I would meet with a couple bankruptcy attorneys and a couple debt settlement companies so you may compare the two options against each other.

If the account is charged off, which it more than likely is if it’s at a collection agency, credit counseling will be of little help since most collection agencies and debt buyers don’t work with them.

If the account isn’t charged off, I would reach out to a couple of credit counselors too.

However, before you reach out to any of them, you really need to educate yourself about how it all works.

Thanks for putting together all this information, it’s very helpful indeed. I’ve read through this thread to try to answer my question, and some come close, but I’d like to add a different worry. I recently received a letter from a collection agency about a 9.5 year old medical debt (well past statute of limitations in my state) that included the above mentioned “respond within 30 days.”

This debt dropped off my credit report a few years ago, but if I don’t send anything (DV letter or a C&D letter) to the collection agency within the 30 days can they (or does it make it easier) for them to put it back on my credit report? Am I safest to just let it alone?

Thank you so much for writing this, I was just on my way to sending a VOD letter before I found your article online.

My private student loan was charged off at $26,000 on 4/1/14. My father was the cosigner and now this charge off is currently wreaking havoc and both his and my credit report. The collection agency that is servicing the loan – the loan still currently owned by national collegiate trust is recommending that my father takes out another loan to pay back this loan – something my dad is not willing to do – or that we pay it all of at once – something we simply aren’t capable of doing at this time – or that we pay 10% of it to establish a payment plan – $2600 – and then 1% of the balance for 6 months – approximately $350 – then upon 6 months of on time payments, we will reconvene and my payments will be adjusted to 1% of the remaining balance at that time.

The payment plan seems to be my most feasible option, however, the 10% figure is still pretty high at this time. They are ramping up the threats as the 60th day of charge-off approaches and I am pretty afraid of being sued, however, I have communicated been communicating with them verbally – approximately 3 times – and this is how I got all this info in the first place. Ultimately, I would like to negotiate down the payment plan and maybe offer a fraction of that, do you feel they would be privy on this? What might you suggest I do? Thank you so much, Jared, you’re a live saver.

Thanks for your kind words. If I were in your shoes, I would reach back out to the collection agency and explain that you have tried everything to come up with the $2,600 for the down payment and that it just isn’t possible. I would then follow that statement up with what you can afford.

If the collector explains that the amount you’re proposing isn’t possible, ask for a supervisor and explain the same to them.

I got some great information and just wanted to ask a quick question. I read the pay for delete article you’ve posted previously and I was curious if you have an idea if I should pursue or not. I have a valid medical debt of less than $300 about 3 years old. It was put on my credit report buy a 3rd party collection agency. I’m almost done cleaning my credit other than this. In part 3 of the article I was wondering how it works if you agree on payment before asking for pay for delete? For me, it’s if they won’t delete it from the report why pay it? I want to have it deleted for paying if possible but don’t want to be on the hook for paying if they won’t delete it. Any advice would be great.

It’s pure psychology. If you’re cooperative, they’re more likely to be cooperative. Pay for deletes are a courtesy. The collector and the collection agency could care less about your $300. It’s not a large enough balance to entice them to remove the item from your credit report beyond them just wanting to help you.

Also keep in mind that a lot of collection agencies won’t agree to a pay for delete. And if they won’t, it’s still in your best interest to pay them anyway. Especially if it’s your last delinquent account.

The reason why is when you apply for credit in the future, those creditors that you apply to want to see that you take care of things. The logic is, that if you pay your delinquent bills, you’re a better credit risk to them than someone who doesn’t.

A lot of lenders look back 24 months when they evaluate someone to lend to. Delinquent accounts remain in this 24-month window until they have been paid or settled for more than 24 months. If I were in your shoes, I would pay the bill regardless of the pay-for-delete outcome.

Hi Jared,
How do you request the original contract to validate the debt without sending or risking what you have described in the “Debt Validation Letter”? I just want the original contract.

Also, if the collection agency is not licensed in your state of residence does that mean they have to remove the negative reporting from your CBR or what does it mean?

Finally, is there anything that can be done about contracts that are misleading? If they don’t deliver on their end of the arrangement but put you in collections for your failure to pay the debt is there any course of action here?

I apologize for the majorly-delayed response, I’ve been swamped lately.

You may want to reach out to the original creditor to get a copy. If the original creditor won’t provide it, you could call the collector and verbally ask them for it. Just check your state’s law regarding acknowledgement of debt and the statute of limitations prior to doing so. If the debt collector won’t cooperate, ask for a manager to see if they will. If they won’t, you may want to send the validation letter to the agency.

Reporting to your credit is considered “collection activity”. If a collection agency isn’t licensed in your state to collect when they have to be, then yes, they would have to remove the item.

Potentially, if you feel that the entity that you entered into contract with didn’t abide by the contract’s terms, they may be in breach of contract. If you feel this is your situation, you should reach out to an attorney to get proper legal advice and go from there.

Please feel free to reply with any additional questions. Have a great day!

Hello Jared, I’ll try and make this quick. I have two student loans that are in collections. When I pulled my credit report, it looks like it’s been sold several times to different collection agencies. One is for $10,000 and the other is for $13,000 and I got them in 2006 and 2007. Also, in 2009 I got a divorce and had to forclose on my house so my credit score is pretty low. I was typing up the validation letter when I came across this article which has me thinking what should I do now because I’m totally confused. I know there isn’t much I can do about the foreclosure (I think) but should I call the orginal agencies that I got the student loans through or should I be calling the 3rd party agencies? Should I still send the validation letter since the accounts has been sold several times? I guess what I’m asking is, what should be my first step to get the ball rolling because I want to buy another house sometime next year but I can’t until I take care of those student loans? Any help would be greatly appreciated!!!

Are the student loans private or federal? If they’re private, they may be passed the statute of limitations…

If I were in your shoes, I would take the following steps.

1. Find out if the student loans are private or federal.

2. If they’re private, look up the statute of limitations in your state.

3. Check your credit reports for the date of last payment. Or if a payment was never made, the date of original delinquency.

4. If the student loans are private and the time between the dates in step 3 are longer than the statute of limitations, that may solve your problem right there. However, if that is the case, I would recommend speaking with an attorney just to be sure.

5. Subtract the amount of time from between now and the date of original delinquency. Then, subtract that amount of time from 7 years. The answer to that equation is how much credit reporting life is left. If I were in your shoes and the loans are private, I would wait to apply for the mortgage until they fall off my report.

6. If the foreclosure from 5 years ago doesn’t have a deficiency balance, it’s not hurting you as much as you think. Generally speaking, foreclosures will only be an obstacle when applying for a mortgage if they’re less than 3 years old.

7. Establish new credit if you haven’t already. Ideally, you want 4 active trade lines that are reporting positive credit history every month. Secured cards, unsecured cards, auto loans, it doesn’t matter as long as you pay them on time and they’re reporting to your credit reports.

Please feel free to reply with any additional questions. Take care and good luck with everything.

I’m at a loss of what to do, I’ve been trying to clean up my credit due to some mistakes when I was younger, and so far I’ve been fairly successful. But just recently I received a call from a collector – Commonwealth Financial – who would give me no information until I gave them my social security number to verify my identity. I’m not aware of any still outstanding debt and had thought I had paid everything off – so I refused, and checked my credit report. Turns out, they have a claim against me for > $600 – for what looks like a medical bill, but that is all I am certain of. The debt was reported at the beginning of this year, and I haven’t had any medical bills I haven’t paid, plus I have insurance. I have received no mail correspondence from anyone as well. I want to resolve this, but I’m wary of giving them my personal information – would this be an appropriate situation in which to send a validation letter?

Well, the balance is small, so the risk of them pursuing you legally is minimal.

Additionally, if you find the debt to be valid, you may find more value to your long-term situation by paying the account in full since they will probably report it as a settlement on your credit report if you settled it. I don’t believe the amount you would save by settling would be worth the settlement remark, personally.

So given the circumstances, if you feel more comfortable sending the letter in an effort to gain the information you’re looking for, I would send the letter.

Amazing article, can’t stress it enough. I was wondering if you could provide your opinion for my situation:

Received letter from a law firm saying they are working with Midland Credit (assignee of Cit Bank) to collect the debt. A week later, another letter proposing a payment plan. My debt is about $2k – do you believe this law firm will sue me? What would be your recommendation? This debt is about 5 to 6 years old.

I am trying to buy a house next year, and want to avoid additional damage to my credit report.

Thank you! Midland is pretty aggressive. If the attorney is located in your state, I would take the situation seriously.

I would check the statute of limitations in your state to see if they have expired. If the account has expired, it’s supposed to fall off organically 7 years after the original date of delinquency.

If the account isn’t passed the statute of limitations, you may want to consider settling it.

Before making this decision, evaluate your collectability. Do they know where you work? Have you paid or settled other collection accounts? Do you still bank with the same institution as you did 5 or 6 years ago?

I would also google yourself, because they probably will. Can you find your place of employment via Google? If so, and if the account is still within stats, you’ll probably want to be proactive and settle it as soon you can afford to.

Please feel free to reply with any additional questions. Good luck to you.

Thank you for the great article and I hope you are available to answer my questions.

My parent received a debt collection letter but is currently out of country until 3 months later. What is it that we can do about it now? Should I call the collector to tell them about this (if so, what should i say?) or should I just wait until my parent comes back?

My pleasure. I would reach out to your parent and ask them what their goals are pertaining to the account. If they would prefer to address it immediately, perhaps they can setup a Skype account to call the collection agency to get it handled.

Great article! You give a different perspective on how to handle debt collectors.

I live in Ohio and In 2004 my fiance and I purchased a home together. We took out a second mortgage to fund improvements. In 2006 my fiance and I split up and she filed for bankruptcy. I did not file and since the deed was in both our names, the bank refused to refinance the house in just my name without her signature. Long story short, the home was foreclosed in 2006. I no longer have negative marks on my credit report from the foreclosure since it has been more than seven years since the foreclosure was reported to the credit bureaus. The second mortgage that was in collections has also been removed.

The second mortgage has been transferred to several collection agencies and recently I received a letter from a law firm (debt collector) stating that I owe $30,000 for a second mortgage from 2006. The law firm claims to be representing a client who I have never heard of (not the original creditor). Should I send a debt validation letter? The debt collector states in the letter that I should ask for validation within 30 days of the letter and they will assume the debt as valid if I do not request validation…

Thanks! I would reach out to an attorney in your area to get proper legal advice. The statute of limitations in Ohio for a written contract is 8 years. Here is a link to the Ohio Statute stating such.

If I were in your shoes, I would find out the exact date when the account will expire and lay low until then.

I understand that the language in the text stating “they will assume the debt as valid if I do not request validation” can be confusing, as you and other consumers probably feel that if you don’t send the debt validation letter that you are somehow admitting to its validity.

The language isn’t for that purpose, its purpose is for protecting the collection entity from unfair collection practices … that’s it.

Thank you for your blog. I have a valid telecommunications debt from 2010 that is under $250.00. A few years ago, I disputed the item (which was reported through the OC) on my credit reports and the item was removed from all three reports. Then two years later, the debt was bought out by a Third Party CA and placed on my credit reports again. I have sent two pay for delete letters to the CA over the course of the last year and have not received any response. Nor have they attempted any further collection. As a result I disputed the debt with the CA with the three bureaus and they have all removed the item from my report (probably due to a lack of timely response) once again. On yesterday, out of the blue, the CA sent me a collections agency letter with the standard warning that I have 30 to request validation of the debt or they will consider the debt valid. My question is how should I respond to this new communication from the CA. The item has already been removed from my reports and now my concern is that any communication with the CA could prompt them to re-enter the item on my reports. Except for this letter, they have not taken any action in over two years and now that the items have been removed from my credit reports, I am not sure of the best way to proceed with them. Please provide your best advice. Thanks

My pleasure. The new collection agency probably has a policy to wait 30 days after mailing their initial letter to you before they report it to the credit report. Most but not all collection agencies employ this policy.

If there is a decent amount of time left on your 7-year reporting period, you may want to call and confirm their policy in regard to this. If they haven’t reported it yet, you may want to just pay them to eliminate the issue.

Thank you. That’s only true if the validation letter is sent within the first 30 days. If a debt validation letter is sent after the 30 days expire, the debt collector is only required to mark the account as “disputed” on the credit report.

Great article, it’s really given me some things to think about as I consider my strategy.

On a related note, what’s your view on “no contact” letters, assuming the debt is still within the SOL? Are they likely to have the same counterproductive effect of drawing the debt collector’s attention, or are they a useful tool for dealing with the nuisance of multiple daily calls? (Apologies if you’ve addressed this elsewhere, I haven’t had time to go through your site exhaustively.)

My question is about whats a valid debt ? Earlier this year I had an existing balance on ( bank A) card and was current and never late. Then in April I received a credit card from another bank transferring this debt to them(bank B) and all I had to do was “activate” the card. I never heard from bank A again in fact they have no records about this debt I had with them. I never “activated” my card from bank B but they keep sending me statements. I sent bank B a validation letter and they promptly closed my account of which I never agreed to in the first place. Checked my credit report and its delinquent for 90 days on any account that doesn’t exist! Help as a consumer I dont feel like what they’ve done is legal. Am I wrong?

My interpretation of a valid debt is a debt that you are familiar with and agree with.

It doesn’t sound like you feel that way about your situation. I would recommend calling both the original and current institutions to gain more information about your situation. Make sure to be assertive and go up the ladder as necessary.

Thank you for the article. I recently had my credit pulled from a loan officer friend of mine. There are collections from 3-5 years ago. Many are very small amounts, many are under $100.

I have a very common name and I think my name was merged with someone else.

There are 43 derogatory accounts listed. Some are mine and some are not, honestly it has been so long that I don’t know which ones are which.

Should I send validation letters?

I have contacted Equifax and Transunion directly, Equifax deleted 12 items and Transunion 16 after requesting validation. Some of the items not deleted on equifax were on transunion but not visa versa.

I was going to send validation letters to every company listed on the credit report.

I paid a BOA CC account three months ago (It was in collection for about 2.5 years) I settled it but NOT for the full amount. It is now on my credit report as derogatory. I’ve had people that I know say they can dispute it still for me to have it removed completely from my credit report, I am weary of it. If that is possible, I’d rather do it myself following tons or research!

Is it too late to possibly have it removed? If not, it won’t fall off of my CR until 2017. I can’t even get a 1500 small builder loan. What can I do?

Thank you for your kind words. If this is your last delinquent account, you should begin to qualify for new, unsecured credit soon. Is the B of A account now showing as settled with a zero balance? If so, you may want to apply to Capital One.

Capital One is pretty liberal when it comes to working with people who are recovering from resolved collections and charge offs. Also, for additional insight into your recovery, you may want to read my article about rebuilding credit after debt settlement.

In regard to getting the item deleted, if you feel any of the information that is being reported to your credit report is inaccurate, you may find success by disputing the account directly with all 3 credit bureaus.

First let me thank you for this article and express my admiration. Not too many people is offering advice of this quality or trying to help people like you are doing.

My case: My wife and I live in FL just for a few years now, but suddenly we both have been receiving calls and letter from different collection agencies, trying to collect debt that have been inactive for more than 10 years. I understand there Statute of Limitations, and I have read some articles about them, but we hire a firm of attorneys to help us with my wife case (she was the first to receive such a letter of collection). After several months paying the law firm, we only know that the collection agency has not answered the letter of validation yet and we, however, keep paying a monthly fee to the law firm. Just a few days ago, I received also a letter from another collection agency, also trying to collect on a 10-year-old debt (for an amount over ten thousand dollars that I don’t know where it came from). I was about to send a debt validation letter when I found your article. My questions for you now: Should I really worry about this when, based on the Statute of Limitations, no collection agency can sue us now? Should I do anything? And, for my wife’s case, should we just stop the law firm agreement and wait to see what the collection agency does next, given that they already received a debt validation letter from us (through the law firm)?

I think you are doing a great service to those who feel overwhelmed and lost in a black hole, as do I! Thank you!!

I am being sued by a collection agency who purchased my account from Citibank. The agency filed the court papers just short of two months before the Statute of Limitations would have been reached. The last payment made to the credit company shows up as $0.01 (one cent) from the bank where my husband sometimes made ATM payments. Without the last “payment,” the account would have been past the SOL when the court documents were filed. How much weight would a one cent “payment” be given in court? I don’t see how anyone can conceivably count that as a legitimate payment (even the credit card company added their standard late fee that month!).

Also, there is a discrepancy on amount owed. The court documents show $5,000, but the attorney for the debt/collection company (partner companies apparently owned by same entity) claim $9,000+.

I tried talking to the representative for the attorney on record about a reduced settlement amount. When I suggested an amount, he said it was too low to consider, and when I asked him for an amount that his client might work with, he said the full $9,000+, or I could just see them in court.

Do you have any ideas about the validity of the “payment,” which amount I a liable for and/or how to negotiate an out of court settlement? I have 2-3 more months before the court date.

I am one of those you identified in your article as being afraid (feeling intimidated is a better word choice for me), and so any help would be greatly appreciated!

Thank you so, so much for this informative website. This seems to be the closest I’ve been able to come to finding useful advice for my situation. When looking over everything, it seems like my best choice would to be a calculated risk, and I’m having a hard time figuring out whether others know best, or whether they’re just being conservative in their advice to avoid liability.

This month I discovered a private student loan debt on my credit report. According to my report, I’ve missed 40 payments. I live in California, where the statute of limitations on a written debt is 48 months. With the accrued interest, there’s no way I could even come close to approaching a payoff of this debt. I’m trying to figure out whether I should risk contacting the debt collector to negotiate a settlement, or whether it would be better to try riding out the rest of the statute of limitations.

Here are some things to consider:
- First and foremost, my credit score is already wrecked for the next handful of years because of a different issue involving my federal student loans. These loans are now being paid back and I have a handle on them again and don’t foresee difficulties paying them back in the future, but of course the original marks on my credit report will be there for years. I’m only 25 and don’t plan on buying a home for many years, so waiting for things to fall off my credit report is fine.
- It doesn’t seem like I’m very “collectable”. Judged against your own criteria, it doesn’t seem (knock on wood) that they know about my place of employment. (Noting your bit about social media, I’ve checked my privacy settings on social media sites as well.) My checking and savings accounts have a minimal amount in them. I don’t have any paid or settled charge-offs. I don’t own a home. I don’t have high credit (no kidding) and I’ve never settled with another collections agency. The original principal was $7,500, now hovering around $15k with interest and fees. Since I’ve never made a payment they shouldn’t have access to my checking account numbers.
- I’ve only received one letter from them, this month, which has an offer to “bring my account into good standing” but doesn’t say anything about being in collections or being in default. In fact, **this debt is not listed as being in default – only delinquent** despite the fact that my credit report clearly shows the account was 30 days late as early as April 2011.

Is it better to try to float under the radar until the statute of limitations expires, while trying to save up an amount for a possible settlement? Or is it better to reach out to my creditors first? Or does the fact that it’s not being treated as a “default”/”in collections” account for some bizarre reason have any effect on the statute of limitations?

Thank you SO much for your prompt reply! This was the strategy that seemed to make the most sense to me, for exactly the reasons you outlined, and I couldn’t figure out why nobody else felt the same way. I will reexamine my budget to set aside as much in emergency savings as possible in case they contact me for a judgment and cross my fingers. I will also contact a local Legal Aid group to see if I can find an answer to my statute of limitations question – it’s bizarre to me that this account is listed as delinquent rather than in collections, and I’m worried that it’s some weird loophole for the benefit of the lender. As one final question, do you know of any particularly reputable legal aid associations with experience in student loan matters? As far as I’ve been able to gather, there are millions of bankruptcy lawyers, but it’s harder to find folks who understand the nuances of student loan law. If you happen to know of any helpful resources, they’d be greatly appreciated. Either way, thank you!

I was formerly one of the most successful debt collectors in the country. And don’t worry, I wasn’t one of those huffy-puffy types. I also held positions of Collection Manager, Corporate Trainer, and Director of Collection Operations. I’ve worked for large third-party collection agencies, collection attorneys and large debt buyers. (full bio)

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Tom Martino has been fighting for consumers for more than 30 years utilizing Radio, TV, Newspapers, Magazines, and the Internet. Tom can be heard weekday mornings on the radio from 9 to noon on Denver’s popular AM talk station 630-KHOW. Each show is filled with calls from people needing consumer help, information, and advice.

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